System Error: 5 Access Denied points to some type of authentication issue. Please try accessing the remote machine via the O/S by typing \\MachineName\Admin$ or \\IP-Address\Admin$.
System Error: 5 Access Denied simply means Invalid Credentials (UserID & Password) or your current logon credentials do not have sufficient rights (i.e. Administrator) to perform the selected function. The NT Utilities & Mini Remote Control programs rely heavily on the Operating System's built-in security and Administrator rights are required to install, remove, start, or stop any Service in Windows NT/2000/XP/2003/Vista/2008/Windows7 security.
For more information about this process, please take a look at the following Knowledgbase article about Microsoft's NT pass-through authentication:
How Microsoft's NT "Pass-through"
The DameWare NT Utilities program is basically just executing standard Microsoft Windows API calls which asks the Operating System to perform the selected task. In terms of authentication, it is similar to typing \\MachineName\ShareName and the Operating System determines if you have the necessary credentials/authentication to complete the task.
However, if the remote machine was running Windows XP, this behavior could be related to "Simple File Sharing". Windows XP Home & Windows XP Professional installed on a machines as part of a WorkGroup has "Simple File Sharing" enabled by default which offers no NT Challenge/Response Authentication. "Simple File Sharing" also does not allow you to remotely install/remove/start/stop the DMRC Client Agent Service. "Simple File Sharing" cannot be turned off in Windows XP Home, therefore you must manually install the DMRC Client Agent Service on machines running Windows XP Home. Once the DMRC Client Agent Service has been installed, then you should be able to use the "Encrypted Windows Logon authentication method to connect to this machine.
Please refer to the following knowledgebase article for more information on DameWare and Windows XP:
Is DameWare Software compatible
with Windows XP?