There are many ways to solve this problem without elevating the privilege of the entire application pool - this way, if your application is compromised, it has less potential for damaging your entire machine and other machines on the network.
How are you connecting to the database - do you use ASP, ASP.NET, etc?
You should consider using an encrypted connection string with a sql authentication username/password instead of using windows authentication. If you want to use windows authentication to connect, you can create a special account that does not have administrative rights on the machine and is not interactive, and allow that account access to the SQL Server instead of using an administrative account. You also have options for making a specific application impersonate that account instead of running the entire application pool in it.
You should NEVER run your application pool under an administrative user, and you should also avoid using an administrative user to connect to SQL server.
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