SSRS report Deploy Problem

First suggstion / comment / question is - Did you execute the change in the "Reports" or "ReportServer" web.config?  The ReportManager runs via the "Reports" IIS virtual directory, that in your file system should be located in [MSSQL Dir]\Reporting Services\ReportManager\ whereas in a default install would also include the "ReportServer" IIS virtual path, which would point to something like [MSSQL Dir]\Reporting Services\ReportServer\

I'm looking at a SSRS 2005 instance atm for that info, so it may be slightly different on another version, but there should be two virtual directories - I know with SSRS 2000 it was similar or same as well.  The Report Manager or "Reports" app is for the manager / viewer app, and the "ReportServer" virtual dir is for the SSRS Web Service that can be called programatically.  

Make sure you edited web.config in the ReportManager folder; you will definitely need that.  In addition, I'd guess that there's a better than average chance that the ReportManager app actually calls ReportServer web app/service, which has a seperate web.config, repeatedly.  You might need to add that in both web.config files if your install looks like any of the 2000/2005 structures I'm dealing with here.

Finally, make sure you've restarted all the associated app pools to ensure that it picks up the change (it should do this automagically when you overwrite web.config with changes, but I find it often doesn't do that, depending on your version of IIS and your specific configuration).  

On a side note, in both web.configs, there are some request time-out settings that could prevent the upload, though from your posted error message, it really does look like you're exceeding the httpMaxRequestLength setting specifically.  

Also check the httpRuntime section of your machine.config just for due dilligence.  The default in every .NET version I know of off the top of my head is 4MB for maxrequestlength, so I'm a little confused about what's going on there, unless there's an additional config item for SOAP messages, but as they run over http, I wouldn't think so; I've never heard of one but I'm no genius :P

If none of that helps, please post your specific versions / patch versions / service packs of your SQL Server, SSRS, App Server OS and IIS as that would help troubleshoot.  If possible, sopies of web.configs from both directories and your machine.config would be even more helpful.  Of course, be careful to censor, remove or paraphrase any potentially security-sensitive info!

Looks like someone already posted you a link to another thread while I was writing my little book here, but here's some more specific stuff to look at.