Error message is 'd:\Program Files\Microsoft SQL Server\MSSQL.3\Reporting Services\ReportServer\RSReportServer.config' is denied.'

I open SSRS configuration and I do see the service as started and running.

I gave Network Services the necessary permissions in the reportserver folder and config file. SQL Server and SSRS are using LocalSystem as the 'Log On As' in Sql server configuration manager. Most of my sites I googled seem only relevant when it's Network Service running. I changed it to log on as NT Autority\NetworkService but still had the same issue.

In SSRS Config Manager, I see that Web Service Identity is not configured (red), though it is showing as readonly domain\aspnet.

Windows Server 2003 R2 and SSRS 2005