What version of LEM and Reports?
I've noticed a similar issue with a password containing the @ character with LEM 6.6 and Reports 6.4, and I don't know if that's a new behavior or something that's always been there. Likewise, the same password works fine for the web console.
We use a password generator that sometime gives us characters that are not allowed. However this time I did not see a warning or anything. When we looked and decided to change the password finally I worked. I looked at the logs when I run reports and hsql threw an error while using the bad password. It cleared while going through a kb on login error to reports. I was trying to verify port 9001 when suddenly it cleared. I made no phone calls to the server or McAfee guys about that port and suddenly it worked after the password change.
Thanks for the reply curtisi.