Both the database engine and reporting services are running on the same box.
Database engine and Sql Server Reporting Services are running under Local system
You need to run SSRS on Network service account because the local systems account does not have access to network resources. Go to configuration manager and right click go to properties and you can change the account there.
Where can I check Under which account ASP.net is running?
Right click go to properties on the default website site then directory security.
1. Default website->properties ASP.net version 1.1.4322
This could be a problem because SSRS require .NET 2.0 as the default. This is not good because SSRS 2005 expect your IIS to be running .NET 2.0 so you need to change the default website to .NET 2.0 and then add the code below which is an application Start element to your default website Asp.net Web.Config file. I have also added the relevant link so you could understand supportedruntime definition in all .NET applications.
2.Reports->properties ASP.net version 2.0.50727
3..Reportserver->properties ASP.net version 2.0.50727
Go to the location below and run the utility aspnet_regiis after you have made all the changes please run tests in a sandbox before applying to production.