If I remember correctly, your game is installed to program files directory, right? Maybe that is the cause of your problems while modding (generally). Maybe I'm wrong, maybe not, but try to run the tool as admin, or - just to try it once to exclude this possibility - disable UAC, restart the PC, and try the tool once more, with ini file deleted - just in case.
(My SH is installed on D:\ partition, which is all just for games; its a good practice to avoid system partition and program files directory, especially with games like SH4, where there is a lot of modding going on (not just because of security etc., but also disc fragmentation).
And by the way, I have UAC disabled on my Win7x64, but once it was enabled, every time I tried to copy something into program files, it asked me for confirmation, etc., maybe that report generator needs some data from your main installation dir, like ship names or something, and it can't acquire access to it).
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