Are you using a local instance of SQL 2005 Express which was installed by your copy of Veeam Backup?
If so, and you want to continue using it with Reporter 4, just point to this database during upgrade.
Also, Reporter 4 will install SSRS 2008 and integrate it with your current SQL 2005 instance automatically.
If you're still having problems with this scenario, please open a support case - it's very hard to help you through the forum.
Hope this helps.