GOT IT TO WORK.

The problem happens when installing RS on Windows 2000 Server that is a domain controller. RS doesn't do the setup correctly. The basic steps to fix the problem are

1. Grant impersonate privilege to IWAM_<machine> account (see knowledge base article 824308). Go to domain controller security policy in administrative tools. Click security settings -> Click local policies -> click user right assignment. In the right pane, double click impersonate a client after authentication. In security policy setting window, click define these policy settings. Click add -> click browse. In select users or groups window, select IWAM account name and click add. Then, click Ok -> Click OK -> Click OK. At command prompt, type the following command: secedit /refreshpolicy machine_policy /enforce. Then, type iisreset.

2. Remove IWAM_<machine> account from guest group. Go to active directory users and computers in administrative tools. Open users folder. In right pane, double click IWAM_<machine>. Select member of tab. Remove guest. Click OK.

3. Reboot.

4. Run rsactivate. From command prompt, change directory to C:\Program Files\Microsoft SQL Server\80\Tools\Binn. The run following command: RSActivate.exe -c "c:\Program Files\Microsoft SQL Server\MSSQL\Reporting Services\ReportServer\RSReportServer.config" -t.

See the following link for more details http://msdn.microsoft.com/library/de...rs_v1_8k82.asp .

For now, this seems to have fixed this problem.

Chris