Follow the steps below to resolve the issue:
1) Enable SQL Authentication on SQL server side first.
2) To be done on SQL Server hosting the MessageStats Database:
Create a SQL Account on the SQL Server hosting the MessageStats Database and provide the account Database Access to MessageStats with the following roles, Public and MessageStats_Web.
Note: You need to create SQL server login using SQL authentication. Do not use Windows NT Integrated Security. When you create the required SQL login, specify 'SQL server authentication' for it.
3) To be done on the IIS Server hosting the MessageStats Reports:
Locate QMSReports.udl file under C:\Program Files\Quest Software\MessageStats (by default). Double-click the file to invoke the Data Link Properties page. Provide the SQL user and password that was created in step one and select, Allow saving password check box. When finished, try the Test Connection Button to ensure that the connection works correctly. Once the connection has been confirmed, click ok and yes to save the password to the text file.
Try to access reports now.