Problem description-
Server Error in ‘/virtual directory name’ Application.
Error in File UNKNOWN.RPT:
The request could not be submitted for background processing.
Description: An unhandled exception occurred during the execution of the current web request. Please review the stack trace for more information about the error and where it originated in the code.

Exception Details: System.Runtime.InteropServices.COMException: Error in File UNKNOWN.RPT: The request could not be submitted for background processing.

Solution-

This is most likely a permission error in C drive. To fix this please follow these steps-

Open My Computer > Right click ‘C’ drive then properties > Security tab > Click Advanced > in ‘Permissions tab’ click ‘Add’ > Add ‘Network Service’ > in the ‘Apply onto’ drop down list make sure ‘This folder only’ is selected and no other should be selected > Make ‘Read Attributes’ and ‘Read Permissions’ are checked > Click Ok > Also make sure ‘Replace permission entries on all child objects’ is NOT checked.

***Note: If you incorrectly set to anything other than ‘This folder only’ in  ‘Apply onto’ dropdown list will result in severe permission issues and all of your sites will prompt for authentication so handle withe extra care.***