The data set DataSet1 is a shared dataset. SQL Server 2008 Reporting Services does not support shared data sets

I was working on a SSRS project using Sql Server 2008 but decided to upgrade to R2 version, so I can share commonly used datasets across all reports. After the upgrade I converted my SSRS project to the new version and converted existing datasets to shared. When I try to build the project I got the following error:

The data set, DataSet1, is a shared dataset. SQL Server 2008 Reporting Services does not support shared data sets

Hmm, did the upgrade or conversion fail?

Solution
It came out you need to update one of the project settings called: TargetServerVersion. To do that right click your SSRS project, select Properties and search for that setting:


The correct value to be set is "Sql Server 2008 R2".