Product:
Cognos Controller 8.5.1
Windows 2008 R2 server
Cognos BI 8.x

Symptom:
When user run a standard report inside Cognos Controller client they get a login dialog from Cognos Connection inside. Cognos Controller is working in other areas. But when you select “Verify Account Structure” and run the report – you get a login dialog asking for you User ID and Password for the data source: SQLNCLI.1:… instead of the report result in HTML format.

Error message when you test the data source link in Cognos connection:
QE-DEF-0285
OE-DEF-0321
RQP-DEF-0068
UDA-SQL-0031
UDA-SQL-0129
UDA-SQL-0564 [Microsoft OLE DB provider for SQL server] Login failed
for user ‘cognos’ (SQLSTATE=42000, SQLERRORCODE=18456)

Cause:
The REPAIR button has not worked in Cognos Controller Configuration Report Tab. Can be because the user running Controller Configuration program is not system administrator in Cognos Connection. Data source connections have been manually updated in Cognos.
The correct password is not entered in the Cognos Connection data source connections.

Possible Solution:
Manually update the login value in Cognos Connection for the controller database.
Click on Launch – IBM Cognos Administration
Click on Configuration tab
Click on the data source connection you want to edit, starts mostly with SQLNCLI.1
Click on more time on the SQLNCLI name to go into the login object.
then click on the “SET PROPERTIES” icon on the right side of the login object.
Click on Signon tab
Click on Edit the signon… link
Here you can enter the correct password for the controller data source.
Click OK
Click OK
Click on the SQLNCLI link in the top next to the cognos link, so you are back on the data source connection and not in the signon object.
Click on the “Test the connection” icon at the right side of the data source.
Click the TEST button
If it display “Succeeded” then you are good to go.
Click Close
Click Close
Leave Cognos connection and start Cognos controller client and test the report again.