Best thing to do is to check out other peoples custom reports. Check out the documents here on Thwack, they are located in the Patch Manager server location and click on the Content tab and then choose the Custom Report Templates on the left side.
Here is the URL
Hope this helps.
Go with Lawrence's answer instead.
It is possible to create the report for a specific WSUS Target Group, and there are a couple of ways you can go about doing this. The first thing to note is that the Computer Update Status report that you modified to get your current report uses a very basic datasource (also called "Computer Update Status") and that datasource does not contain any target group data.
In order to get target group data in the report, you'll need to change the datasource for each of the selected fields from "Computer Update Status" to "Computer Update Status With Computer Information". To do this, click on the field name hyperlink in each row of the Report Builder, navigate to the second line of the flyout menu, and select the same field from the new datasource. For example, to change the "Update Title" field, click on "Update Title", select "Computer Update Status With Computer Information", and then select "Update Title" from the secondary fly-out menu.
Once that conversion is complete we can add the field to allow filtering on the target group. If you want to display the target group name in a report column so that you can filter in the Report Viewer, you will need to add the field to the field list in the Report Builder. To define a permanent custom report, or a report that prompts you for the group name, you'll need to add the field to the filter list in the bottom half. The field you need is Group Memberships which is a semi-colon delimited list of all of the groups that a client system is a member of. To filter on this field, define a CONTAINS filter with the group name you want to report on. The Approved Updates Counts By Status for Computers in a Computer Group report shows an example of how this field is used in the filter list.
The other way you can get target group data is with either the "Computer Update Status With Approval Information" datasource, or the "Updates With Effective Approvals" datasource, which provides the Computer Group Name field. The "Approved Updates Installation Summary Info By Group" datasource provides the Computer Group field. Both of these fields are single value fields that will generate one row for each pair of ComputerName/GroupName occurrences. The Approved Update summaries by computer groups report provides an example of how this field can be used.