In this scenario the following is true:
- ERROR: HTTP status code --> 500
- ERROR: Microsoft.ReportingServices.UI.FolderPage+InsufficientPermissionsToRoot: User 'domain\user1' does not have required permissions. Verify that sufficient permissions have been granted and Windows User Account Control (UAC) restrictions have been addressed.
Authentication is failing due to the service running under a user context and the authentication methods set.
Remove Negotiate from the RSReportServer.Config file (leaving only NTLM) and restart the SQL Reporting Service service to force NTLM authentication.
Leave both Negotiate and NTLM and register HTTP Service Principal Name (SPN) to the domain account running the SQL Reporting Service service and restart the SQL Reporting Services to allow Kerberos Authentication.
For more information see the following URLs:
Configuring Windows Authentication on the Report Server:
Registering a Service Principal Name (SPN) for a Report Server