First of all, I would normally run heavy report like this on the server itself for a huge preformance lift.
This report IMHO is badly constructed - I don’t see why the Item Ledger Entry isn’t filtered to open item only - this alone should give a huge performance lift.
actually the load is on both - the SQL Server and the Client, as well. Poor Client PC hardware - 256 MB RAM I’d consider quite poor nowadays - will slow down processing; but also the SQL Server could have “issues” (also caused by the NAV application) …
If you search the forum for “SQL Performance” you will get plenty of useful advices and recommendations about how to tune your system.