i think it's related to permissions; a lot of the time someone might get a permissions error that says
"User does not have required permissions. Verify that sufficient permissions have been granted and Windows User Account Control (UAC) restrictions have been addressed."
i've fixed that issue before like this, maybe this will help?
connect to local host from the SSRS server itself.
add some users in both places as seen in this screenshot,and then try to connect as one of those users.
Lowell
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