Can I use Reporting Services 2008 with SQL Server 2005 database?
Do I need both licenses (for SQL server 2008 and SQL server 2005)
Do I need two instances (SQL Server 2008 and
Yes, you can install the database on a SQL Server 2005 instance. However, you very much need another license for SSRS 2008. It's an entirely different product. It is, by far, not just a SQL Server 2005 "add-on."