I was setting up Reporting Services 2005 today on a clean Windows XP machine and I came across the infamous error:

The report server has encountered a configuration error. See the report server log files for more information. (rsServerConfigurationError). Access to the path 'c:\Program Files\Microsoft SQL Server\MSSQL.2\Reporting Services\ReportServer\RSReportServer.config' is denied.

Here is how I fixed this horrible problem. First, I open the Computer Manager and verified that the following two groups exist: SQLServer2005ReportingServicesWebServiceUser$<machinename>$MSSQLSERVER and SQLServer2005ReportServerUser$<machinename>$MSSQLSERVER.

Next, I used the Windows Explorer to verify that these groups have read ACL permissions to the Report Server folder (C:\Program Files\Microsoft SQL Server\MSSQL.3\Reporting Services\ReportServer) by right-clicking on the this folder and checking the Security tab. Finally, I verified that the following users have been assigned to these groups.

• SQLServer2005ReportingServicesWebServiceUser$<machinename>$MSSQLSERVER should have the ASP.NET account assigned to it. In Windows XP, the default ASPNET account is <MachineName>\ASPNET. In Windows Server 2003 and Vista, this should be the built-in NT AUTHORITY\Network Service account.
• The SQLServer2005ReportServerUser$<machinename>$MSSQLSERVER should have the account the SSRS Windows Service is running under, e.g.; NT Authority\SYSTEM, if it is running under local system.

In my case, the issue was caused by the fact that for some obscure reason, the SQL Server setup program had added <domain>\ASPNET to SQLServer2005ReportingServicesWebServiceUser$<machinename>$MSSQLSERVER instead of the local ASPNET account. So, I removed this account and added machinename\ASPNET. This took care of rsServerConfigurationError.

Since I wanted to use my old ReportServer database I followed the steps in this KB article to restore it over the existing catalog database. But then when I browse to localhost/reportserver I had another error that SSRS cannot connect to the ReportServer database because login failed for the ASPNET account. So, I tried the Reporting Services Configuration utility and hit the Apply button on the Database tab but I got an error status message that the ASPNET account already exists in the ReportServer database. To solve this error, I used SQL Server Management Studio to drop the existing ASPNET logins and associated schemas from the ReportServer and ReportServerTemp databases and hit the Apply button on the Database tab in the Reporting Services Configuration utility again.