• I know this is very late reply, but I hope it helps somebody.

    The solution is to have same user (not domain user) created on both server boxes with the same password.

    Make sure this user have access to the snapshot folders.

    Then use windows authentication all along while setting up the replication.

    Read this article for more details:

    http://msdn.microsoft.com/en-us/library/ms151227.aspx