Bug In SSRS SetItemDataSources Web Service Method

Bug:

An existing SSRS 2005 data source at the root directory cannot be used by the SSRS SetItemDataSource web method.

Steps to reproduce:
1. On the machine running SSRS 2005, create a folder named Reports and upload an RDL file named "Existing.rdl" into that directory. For clarity the SSRS path to this report is /Reports
2. Set up a valid data source at the root directory (For illustrative purposes we'll name it DS).
3. Set up a web reference to a SQL Server Reporting Web Services 2005. e.g. http://localhost/reportserver/reportservice2005.asmx

3. Try to set the DS data source to the "Existing" report by calling the SetItemDataSource web method.

C# Code Excerpt:
...
try{

ReportingService2005 reprtSrvc = new ReportingService2005();

DataSource[] dsarray;
string reportName = "Existing"
string _selectedFolder = "/Reports/"
DataSourceReference reference = new DataSourceReference();
DataSource ds = new DataSource();
dsarray = new DataSource[1];
reference.Reference = "/";
ds.Item = reference;
ds.Name = "DS";
dsarray[0] = ds;
//Exception thown ...
_reprtSrvc.SetItemDataSources("/" + _selectedFolder + reportName , dsarray);
}
catch (SoapException ex)
{
//Exception
Message.displayMessage(ex.Detail["Message"].InnerXml, MessageType.Error);

}
...

Exception details...

ex {"System.Web.Services.Protocols.SoapException: The operation you are attempting on item "" is not allowed for this item type. ---> Microsoft.ReportingServices.Diagnostics.Utilities.WrongItemTypeException: The operation you are attempting on item "" is not allowed for this item type.
at Microsoft.ReportingServices.Library.SetItemDataSourcesAction.ResolveNewDataSources(DataSourceInfoCollection newDataSources, Boolean forModel)
at Microsoft.ReportingServices.Library.SetItemDataSourcesAction.SetReportDataSources(CatalogItem item, DataSource[] dataSources)
at Microsoft.ReportingServices.Library.SetItemDataSourcesAction.PerformActionNow()
at Microsoft.ReportingServices.Library.RSSoapAction`1.Execute()
at Microsoft.ReportingServices.WebServer.ReportingService2005Impl.SetItemDataSources(String Item, DataSource[] DataSources)
--- End of inner exception stack trace ---
at Microsoft.ReportingServices.WebServer.ReportingService2005Impl.SetItemDataSources(String Item, DataSource[] DataSources)
at Microsoft.ReportingServices.WebServer.ReportingService2005.SetItemDataSources(String Item, DataSource[] DataSources)"} System.Web.Services.Protocols.SoapException