Virtual directory has unsupported authentication method
Upgrade Advisor detected an unsupported authentication method on the Report Manager or report server virtual directory. Authentication methods that are not supported by upgrade include Anonymous, Digest, and .NET Passport.
Setup cannot upgrade a Reporting Services installation that uses Anonymous, Digest, and .NET Passport. To continue, you can either modify the Authentication method that is specified for the Reporting Services virtual directories in Internet Information Services (IIS), or you can migrate your installation. For more information about migrating your installation, see SQL Server Books Online.
To continue with upgrade, modify the Authentication method in IIS for the ReportServer and Reports virtual directories. For more information about modifying Authentication methods in IIS, see the IIS documentation. After you modify the Authentication method for the Reporting Services virtual directories, re-run Upgrade Advisor to confirm that there are no other upgrade issues.