Error : The report server instance is not configured correctly. Please use the Reporting Services Configuration tool to create a report server database in SharePoint integrated mode before setting integration options for this SharePoint Web application. Answer : Design SSRS Report using Sharepoint http://dereksan.blogspot.com/2011/01/how-to-switch-from-ssrs-native-mode-to.html
Error : The path of the item is not valid. The full path must be less than 260 characters long; other restrictions apply. If the report server is in native mode, the path must start with slash. Answer : We cannot create or design report using VS for Sharepoint Integrated mode database. We need to confige and use SP 2010 to develop reports. http://fendy-huang.blogspot.com/2011/02/create-ssrs-report-with-sharepoint-2010.html