One of my earlier posts here and on the CRM Team Blog was about writing reports to display in IFrames and via ISV.Config. This was written for CRM 3.0, and although the principle remains the same for CRM 4.0, a couple of changes are required to the report parameters.
Extra Parameters passed by CRM
To support multi-tenancy and multi-language deployments, CRM 4.0 passes additional parameters on the query string when the 'pass record object-type...' option is set for the IFrame. These extra parameters are orgname, UserLCID and OrgLCID.
For the report to work in reporting services you will have to add parameters with these names to your report. The orgname parameter has to be a string, the UserLCID and OrgLCID can be either strings or integers. As with the type and typename parameters, these new parameters don't have to be used in the report, they just need to exist for reporting services to accept values for them on the query string.
Changes to the query string for ISV.Config buttons
In CRM 4.0, Microsoft have standardised the parameters such that they are the same for IFrames and ISV.Config buttons. This means that your report should have parameters id, type, typename, orgname, UserLCID and OrgLCID.