What service account are you using for the publication? Since you can get it working on DB1 on server1, it sounds like the service account might be set to the SQL Server Agent.
Is server2 using the same SQL Server Agent account? If not, make sure that Agent account has access to the server1 share. If this is the local system account, I'd recommend changing both hosts to a domain service account, something that you'd be able to grant access to the share. I've seen issues where you get access denied simply because server1 doesn't know "who" is accessing it, so it rejects.
If you configured a different account to run the replication configuration, then you'd need to validate that login has access to the share as well.
My guess is your personal account has access to the share, but that doesn't mean the accounts replication is looking at to work has access.
Best of luck,