An error has occurred during report processing. (rsProcessingAborted) Cannot impersonate user for data source 'DataSource1'. (rsErrorImpersonatingUser) This data source is configured to use Windows integrated security. Windows integrated security is either disabled for this report server or your report server is using Trusted Account mode. (rsWindowsIntegratedSecurityDisabled)

We were getting above error when trying to open the reports in Sharepoint where everythign seemed to be configured correctly
SP 2010 integration with Report server in Sharepoint Mode, Authentication was correct, reports were correct as was working fine in other environment and Sql server report server was showing integrated secuirty enabled.

Here is the solution that worked in our case.
1) This is related to permission issue.

Open IIS manager, click on the site, click authentication and make sure you have the Windows and ASP.Net impersonation enabled on the site.Try to enabled Anonymous access for few mins and then do the iisreset. Once you do that and after few min, you will see that reports started opening without any errors. Once you conform its working, stop the Anonymous and restart the IIS again.
 Once you do that, you will see site reports opening without any issue.

Sometime it is related to access to a folder or some settings that needs to be enabled but hard to find where is that the reports are looking for. Hope it helps people struglling with this isse as i was .:)