windows authentication for LBI reports

We have a subsidiary that wants to use the ODBC Trusted Connection for their published reports.

I can set up the ODBC with a SQL Server driver and successfully create a report. When I publish the report, I am not getting the datasource to work. I did not enter the default login information but used the option
Prompt for UserID and Password
Error message received:

The viewer could not process an event. Failed to open the connection. Failed to open the connection. Elements {FC167323-25DD-4480-9899-1014DC097A7B}.rpt [CRSDK00000000] ---- Error code:0 [CRWEB00000119]

I tried several other settings but was unsuccessful.

Any suggestions?