Both of these errors relate to SQL permissions and they occurred back to back, so we'll cover both. The first error was 'Cannot create a connection to data source'. To solve this, go to this post and follow the instructions on how to set permissions in SSRS.
The second error (insufficient permissions) relates to permissions in SQL Server itself. Remember that SSRS permissions are completely unrelated to Dynamics GP security. You need to grant each user access individually (or put them in an AD group) in SQL.
So, in SQL right click on the main (not the database) security tab, and choose new login.
In the Login - New dialog type in the name of the user (or AD group) that you're going to add.
Move to the third tab which is 'User Mapping', check every database the user needs access to and grant them access to the DYNGROUP role.
That'll fix it.