error: "The report server is not responding. Verify that the report server is running and can be accessed from this computer"

You may encounter this error when you try to browse reporting manager's home page. like...

http://localhost/Reports/Pages/Folder.aspx

Or when you try to browse report server. like...

http://localhost/Reportserver

It shows the following message:

The report server has encountered a configuration error. See the report server log files for more information. (rsServerConfigurationError)
Access to the path 'c:\Program Files\Microsoft SQL Server\MSSQL.3\Reporting Services\ReportServer\RSReportServer.config' is denied.

Reason:

Actually when you configure reporting servies on the machine, 2 virtual folders are created on IIS:

1. Reports - Sql Server Reporting Manager
2. ReportServer - Sql Server Report Server

These are mapped to the following physical location on the machine respectively

1. C:\Program Files\Microsoft SQL Server\MSSQL.3\Reporting Services\ReportManager
2. C:\Program Files\Microsoft SQL Server\MSSQL.3\Reporting Services\ReportServer

If these location do not have proper security permission for ASPNET or NETWORK SERVICES account then you may face above mentioned errors.
So to solve this issue just give the appropriate security permissions (like Read & Execute,List Folder Contents, Read) to ASPNET or NETWORK SERVICES account. If issue still persists make sure the above permissions are applied on RSWebApplication.config file on C:\Program Files\Microsoft SQL Server\MSSQL.3\Reporting Services\ReportManager and rsreportserver.config file on C:\Program Files\Microsoft SQL Server\MSSQL.3\Reporting Services\ReportServer location as well. You can give more permissions like write etc.