See if any of this helps you. It talks about an issue when trying to accessing url with /reports not working but /reportserver working.

http://blogs.msdn.com/lukaszp/archive/2008/07/18/reporting-services-http-401-unauthorized-host-headers-require-your-attention.aspx

in my case - SSRS is configured as a webfarm. There are 3 instances in the farm and they all appear on the initialization tab of the configuration. ...

I have experienced a similar problem with one of the project teams that uses the leveraged installation of SSRS that I support - their subscriptions are for reports that...

your post is a bit confusing. You dont add users to site settings -> item level roles. You add the users to the folders or reports that you have...