Hey nimmi
First, I suggest you try this again with build 827. Build 826 was still a beta version of EA, so there were still some bugs. Build 827 - the first production release of EA 7.1 - is not bug-free, but it was a major improvement.
Am I correct in assuming that you are reporting a data model? That detail might not be relevant, but who knows...
Now for a few configuration questions. Have you tried generating other reports and viewing them? [I apologize if this is obvious, but I need to ask just in case.] Have you tried viewing the 'broken' report in another browser? [Try Firefox, it is free, small enough for a quick download, and behaves well. You can always remove it afterwards.]
What operating system are you using, and what version of IE? There were some problems with early versions of IE 7.0 and HTML reports from EA. Those have mostly been resolved by patches to both products. However, perhaps your OS is blocking access to scripted files (which EA produces).
Finally, if the report remains stubborn, have you tried generating it in RTF, and comparing it to an RTF version of a report that works in HTML? Perhaps EA is doing something that would be visible when you 'eyeball' it in a different reporting medium.
Please let us know.
HTH, David