When changing the application pool identity account in SharePoint 2007, you could just change it through the normal process in IIS using the Identity tab of the application pool’s properties dialog:
but you might notice that these changes don’t stick. This is because SharePoint actually manages the settings for service accounts in Central Administration.
Here’s how you change the service account for an application pool:
1) Open Central Administration and go to the Operations tab
2) Click the ‘Service accounts’ link in the the Security Configuration group
3) Click the radio button labeled ‘Web application pool’, select the ‘Windows SharePoint Services Web Application’ item in the ‘Web service’ drop down, and select the application pool that you need to change.
4) The username text box Configurable service section will be populated with the existing service account name, and you can now edit it and its password.
5) Click OK when you’re done, and you’ll be presented with a JavaScript alert that says you need to run IISReset /NOFORCE on all servers in the farm. Doing this will ensure the cached credentials on the servers are reset with the new ones.