Hi,
The sem5 account should be used for SQL authentication only - it is not valid with Windows Authentication
During the installation, the windows authentication user name/password is not only used to authenticate with DB server and create the related SEM5 DB and tables, but also used to set the anonymous account access privilege to our SEPM web site.
When choosing "Windows Authentication" mode, it basically means that we are talking NTLM, which is a domain concept.