CRM V3.0 on SBS prem cannot access reports

Hi..

currently have an issue with MS CRM with regard to accessing reports.
from both client machine and server i cannot access reports.
from within CRM i get "error.. An error has occurred. For more information,
contact your system administrator."
if i try to go to http://localhost/reports i get "The request failed with
HTTP status 403: Forbidden"

have looked on MS site and googled without much success.

SBS 2003 prem (not R2 and no ISA)
iis using .net v1.xxxx

any idea

thanks