Need Setup Help: "The ReportServerVirtualDirectory element is missing"

I am getting setup problems with Reporting Services 2005.

When I try to connect through SQL Server Management Studio, the browser in the connect dialog can see the Reporting Services 2005 instance, but when I try to connect, I get an error dialog with the message, "The Report Services instance could not be found (Microsoft.SqlServer.Management.UI.RSClient)"

I manually setup ReportServer and ReportManageer virtual directories in IIS to point to the corresponding directories within the Reporting Services installation. Was I supposed to do this manually? Was the installer supposed to set this up?

Anyway, when I browse to http://localhost/ReportServer/ I get:

    *  The report server has encountered a configuration error. See the report server log files for more information. (rsServerConfigurationError)
          o Access to the path 'C:\Program Files\Microsoft SQL Server\MSSQL.4\Reporting Services\ReportServer\RSReportServer.config' is denied.

When I browse to http://localhost/ReportManager/ I get:

An error occurred while parsing the configuration file. The ReportServerVirtualDirectory element is missing.

Anyone know what I'm doing wrong and what I can do to fix?