So having made my report using Business Intelligence Development studio, i successfully deployed it to my Sharepoint Reports Library.
When i tried to access the report from SharePoint, BOMB!!!
An error has occurred during report processing. (rsProcessingAborted)
Cannot create a connection to data source 'DatasSource1'. (rsErrorOpeningConnection)
For more information about this error navigate to the report server on the local server machine, or enable remote errors
So after 24 hours of hitting my head against the wall, i got it right.
1. open your http://sharepointserver/reports/data connections/
2. click to open the data connection
3. On the credentials section, click the "stored credentials" radio button, type in a domain account in the format 'MYDOMAIN\Accountname' and it password. Note that this account can be the service account of your farm, assuming that its also the account that the report server is using when connecting to the report server database (well at least that's how my farm is)
4. Check the two boxes for "Use as windows credentials" and for "Set execution context to account"
5. click ok and you should be good to go