I have figured this out and thought I would update this thread incase anyone else has the same issue. After much looking around (about a week now) I stumbled across a un-related issue but the person was nice enough to include their code which showed a working environment and helped me solve my issue.
To get Birt running within Jboss 5.1 (and I guess this will apply to 6 as well but havnt tested) you need to copy the ReportEngine directory under JBOSS_HOME.
EG, if jboss is in /opt/jboss-5.1.0.GA then copy the ReportEngine directory from birt to /opt/jboss-5.1.0.GA/ReportEngine end then in your code set your engineHome = /opt/jboss-5.1.0.GA/ReportEngine on EngineConfig -
engineConfig = new EngineConfig();
You also need to have the following packaged in your ear file:
And they each need an entry in your application.xml file.
Also, you need to cop any JDBC drivers into the ReportEngine/plugins/org.eclipse.birt.report.data.oda.jdbc_version/drivers directory
Once that is all done, your reports should work. You can have your report templates (.rptdesign ), logging and output directories outide of jboss, it is just the ReportEngine that needs to reside within.
Great post. Thanks.