SQL 2008 Deploying Report Project - Login Prompt?

I used the project wizard to convert my SQL 2005 project to SQL 2008. When I went to deploy the project, there was a reporting service login box. No matter what credentials I entered they were all rejected.

Try this if you're seeing the same issue:

I originally had http:///reportserver_SQL2008. This was giving the login prompt and I couldn't deploy. So I changed the report manager virtual directory in reporting services configuration to something else. Then I changed it back - recreated the virtual directory and it worked.

It seems as though when SSRS 2008 installed, it did not create the report manager virtual directory properly. I also had changed the service account from a domain account to Network Service. This may have had something to with why the virtual directory was not created properly during the original install.

I suppose this is similar to applying default settings to the virtual directory in SQL 2005.