SCVMM impersonation Schizophrenia

I have had a Library server on Microsoft System Center Virtual Machine Manager for years now.  One day it went missing.  I tried to readd it, but it kept saying:
 "Error (2910)
VMM does not have appropriate permissions to access the resource file://blah/share on the blah server.
(Access is denied (0x80070005))
Recommended ActionEnsure that Virtual Machine Manager has the appropriate rights to perform this action."

After revewing many, many web articles (http://support.microsoft.com/kb/969965 , http://www.avianwaves.com/Blog/default.aspx?id=187 , http://www.eggheadcafe.com/microsoft/Virtual-Server/32734159/problem-adding-server-hosts-to-scvmm.aspx , http://social.technet.microsoft.com/Forums/en-US/virtualmachinemanager/thread/c3d63ade-b76d-4837-b22d-e1de8ae46341/ , http://support.microsoft.com/kb/969965 ) and many attemps to resolve this issue, I fired up process monitor and decided to start looking for myself. 

I already had the recommended setup, VMM machine name and VMM service acct in local admin group, etc...

Procmon however showed me that there was a network user comming in from the VMM machine, but then it was impersonating "nt authority/system."  What?  When did that change?

So as you can see, the fix was to give at least Read access to the local system user. 
Now back to creating and destroying VMs with just a few clicks of the mouse!