The process could not connect to Subscriber

Hello,

I have setup transactional replication between Server1 (SQL Server 2012 on windows 2012) and Server2 (SQL Server 2005 on windows 2003 SP2). The replication is push and distributor is on publisher ie Server1.

The snapsots are generated but they can't apply to the subscriber. I get the following error.

 'The process could not connect to Subscriber '

Can someone please tell me why I get this error? I have a link server setup between Server1 and Server2. I could connect from SSMS and run query from Server1 to Server2.

What credentials does distributor on Server1 use to connect to subscriber? Am I missing something? How do I troubleshoot this is?

Thanks,

-P