The path for publishing should be different from the path for viewing. 2008 may be a bit different since in 2005 I do not have the option to set a username and password for publishing in the
Project\[projectname] Properties menum just the URL
On my server the report manager is at
http://servername/reportsI publish to
http://servername/reportserverThe account I am logged in as has the rights to publish and so it works automatically with windows authentication.