Moving the log files in reporting services is an often overlooked step, until after 10-14 months when suddenly your 8gb c drive is full !

Add the following line of code to the listed config files.

Code:

<add name="Directory" value="E:\Reporting Services Dump Files\" />

Files:

C:\Program Files\Microsoft SQL Server\MSSQL.1\Reporting Services\ReportServer\bin\ReportingServicesService.exe.config

C:\Program Files\Microsoft SQL Server\MSSQL.1\Reporting Services\ReportServer\web.config

C:\Program Files\Microsoft SQL Server\MSSQL.1\Reporting Services\ReportManager\web.config

Thanks to Tom Reeves for solving this problem.