After hours of troubleshooting, I found that the IIS 7.0 does not allow executable script and program to run on the SQL reporting virtual directory. After we make some permissions changes on the SQL reporting virtual directory, the installation then can be completed with no error.
Below are the steps for editting the virtual directory permissions:
- In IIS Manager, open the Sites folder, and then open the folder of the Web site that contains the report server virtual directory.
- Select the report server virtual directory.
- In the IIS area, double-click HTTP Handlers.
- In the Actions pane, click Edit Handler Permissions.
- Click Script, and then click OK.