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When testing an AUT in this way actions will be recorded fine, however it will not playback correctly and the error message "Application is not responding" will be received.
This is caused because the dll in use by SilkTest will be able to receive messages from the application (hence the correct recording) but it is not able to send messages to the application (hence the lack of playback). This is because the user privileges in the AUT will not allow the dll access to the application.
It is recommended to run both SilkTest and the AUT under Administrator privileges.
The only workaround for this would be to grant the user-level access to some of the relevant dlls. The procedure for this is described in the following resolution: How can SilkTest run on Windows 2000 or Windows XP if the user account does not have Administrator Privileges?