Reports work when developing but not on live server; datasource connection errors and how to set it up right in development

I am having a lot of trouble with this error:

An error has occurred during report processing. (rsProcessingAborted)
Cannot create a connection to data source 'dataset_name'. (rsErrorOpeningConnection)
For more information about this error navigate to the report server on the local server machine, or enable remote errors

My supervisor and I go into the data connections on the sharepoint site trying to fix it and sometimes we do but there is no clear action that we can pinpoint as the changing point that makes our reports work.    I'm starting to wonder if it's something to do with the way I've developed the reports.  I've looked but can't find a clear answer to my problems so I hope someone here can help me.

The really strange thing was that yesterday during a meeting with my supervisor we were going over the revised reports I'd just uploaded to the server.  We were looking at one report then he went back to look at a different report and then we got the error message like above but when we went back to the report we had just been looking at a minute earlier it would no longer display the report and gave the message.  Since we are the only IT here and we were together we know nothing was changed on the server so I'm at a loss as to why it won't work now.

I'm developing on a virtual SQL Server 2008 R2 accessing a SQL Server 2005 server with database set up as a relational database..

1.  When developing a report should I create only 1 report in 1 Report Project?  I thought if there were similar reports I could throw them together into one project.  Would this cause a problem when using data sources and datasets?

2.  To share or not to share?  Should I create an embedded data source and/or datasets?  

3.  Should I name the datasource I'm testing with something different than the live one?  I did that once and it showed a new connection in the Libraries > Data Connections and my supervisor didn't want me to do that.

4.  I want my reports to be accessable on our sharepoint site as well as having them embedded and sent to employees at regular intervals.  Do I have to make two separate reports for this?  I read that to set up scheduling the credentials/authorizing cannot be set to Windows Authentication, that we have to have a user and password set up.

5.  Credentials and authentications?  Would user's permissions affect their ability to view the reports?  I'm developing on a virtual machine and switching to my desktop operating system to view the reports with my own credentials and it won't work.

If anyone can help it would be greatly appreciated!!!
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HSI_guelphAuthor Commented:
I believe we've solved the issue.  The project properties had overwrite data source set to true so we changed it to false and it started working again.  I would like to know some of the answers to the questions above still so if anyone has any input on any of them please post!
1. There is no need of creating a separate report project for each report. Clubbing them into one will help you finding all the related ones and also using the shared datasources in common.
            Each dataset is related to corresponding rdl and there is no dependency if used within a project. Datasource, yeah you can use accoss many.

2. Shared datasource is a better option as you need not do the same creation again and again. I couldn't get what you meant by embedded one?

3. No need to do that. Let them be the same. Else while publishing, if it is missed, you will end up using the test name itself.

4. You can use email delievery option with scheduling. There is no need to create a separate sql a/c. Windows a/c will do as far as it has sufficient credentials.

5. Yup it depends with the credentials.

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