When you develop a report model project in SQL Server 2005 Business Intelligence Development Studio, the Isolation option in the Data Source Designer does not have any effect

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Consider the following scenario in Microsoft SQL Server 2005 Reporting Services. You use SQL Server Business Intelligence Development Studio to create a report model project. In the report model project, you create a data source against a SQL Server 2005 database. The database has the ALLOW_SNAPSHOT_ISOLATION option enabled. You set the Isolation option to Snapshot in the Data Source Designer dialog box for the data source. In this scenario, when you use a report generated from this report model, you may find the Isolation option has no effect, neither does the Query timeout option.

For more details, please refer https://support.microsoft.com/?id=952112