AppPool not working with Custom Identity

Hi,

We have configured the Site using custom identity in AppPool, it was working fine, but suddenly stopped working and site went down. While checking in IIS, AppPool was down and unable recycle. When we tried recycle the AppPool got this error "the object identifier does not represent a valid object iis7".

We then tried with "Network Service" account and site worked fine.

What might be the issue? From where can I start looking into the root cause.

Please let me know your inputs.

Thanks,

Sharath