Windows Hotfix KB 2661254 Breaks Reporting Services

I have spent the last 3 weeks trying to troubleshoot an issue with Reporting Services for SQL Server 2008 R2 Service Pack 2 failing to start on a server and have come to discover that a Windows Hotfix is causing the issue.

There is no distinction between trying to install a slipstreamed version of SQL Server 2008 R2 with SP2 or trying to install SQL Server 2008 R2 and then attempting to apply SP2 on top of it, either way if KB 2661254 is installed the Reporting Services service will fail to start. You will not get an error indicating the reason for the failure, just that it failed (way to go with the pertinent error messages there Microsoft).

The Windows hotfix KB 2661254 is an update for the certificate minimum key length to prevent the use of any certificate keys that are less than 1024 bit long. This is a security measure to help prevent brute force attacks against private keys. Why this breaks SSRS I do not know. The patch can be safely applied to systems running SQL Server 2008 R2 SP1. 

For now I have passed along word to the sysadmins to not deploy this particular patch to any Windows machine that runs SQL Server and have created a Microsoft Connect item in a hope that they provide resolution to the issue. Please try this in your own test environment, then upvote and mark that you are able to reproduce the problem on Connect.

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