If the Report Server service doesn’t have permission to delegate to the SQL Server, it will try to connect anonymously (step 4 in the diagram above). Which results in this login error:
Login failed for user ‘NT AUTHORITY\ANONYMOUS LOGON’. Reason: Could not find a login matching the name provided. [CLIENT: <Client IP Address>]
Historically report server and SQL server services, that needed the ability to delegate authentication to other servers, were configured to run using an Active Directory user account. Enabling delegation on these accounts was simply a matter of setting the Trust level on the Delegation tab of the account’s properties (with Active Directory Users & Computers).
But Jamie is here to show us a better way.