Hi Guys,
I managed to get it up and running.
Here is what I did, my testing server is a domain-joined server by the way:
I installed the server with the regular process: domain admin user used to install.
I created a local user that the server uses to start the services (Important).
when the installation completed and the server manager site deployment was brought up,
I closed the browser.
I proceeded to go into the Administrative Tools -> services and stopped the gis server
Then, edited the properties of the service from there and changed the user account
to that of a domain user that would have administrative privileges on that system.
Then, I proceeded to go to the directory where the arcgisserver folder is located, in my case,
the c:\arcgisserver. Then, i looked up the properties and into the security tab then into advanced.
Removed inheritance and replaced all child object permissions with the copied permissions and applied.
Then I changed the owner of the object to the same domain account set to start the service and had
it propagate ownership to all child folders and files. Applied, closed and re-opened folder properties.
Then I removed the local user from the permissions list and added the new owner to have full control.
Applied and exited with ok.
Now, start the service and load the server manager site and you should be good to go. 🙂
You can remove the local user and its folder and all traces of it since its no longer going to be used.