Causes: temp file directory is missing in the registry or it is set to a nonexistent directory.
This could also happen if your windows profile is corrupted.
Solution:
open regedit (start -> run -> regedit), go to hkey_local_machine -> software -> oracle-> KEY_DevSuiteHome1 -> reports_tmp
Change the reports_tmp value to c:\window\temp or any other directory you prefer. Make sure you have write permissions on that folder.
Close the report builder and open it again.
Note: If you are trying to run report builder, you should change the REPORTS_TMP on the devsuite side, not on the App server side (key_oracleas1).