Hi,
If following will not work, you have to use Report Manager to set and check the folder options available for reportserver.
If no, then update the CRM and mentioned right ReportServer.
You can check following as well..
1. Can you open your reports server? http://servername/reports
2. create a new application pool and set the following virtual directories to run on that pool
/Reports/
/ReportServer/
3. Then change /Reports/ and /ReportServer/ to run on .net 2.0
Do this by going to IIS and expanding your CRM web site. You will have the reports virtual directories listed there and on their properties menu there will be a .net tab where you can choose what version to run.
4. verify you can now access your reports server.