The following data source cannot be used because PerformancePoint Services is not configured correctly. error while installation of Performance Point Services 2010

If you’re setting up a fresh installation of Performance Point Services 2010 , you might think that all has gone well only to see the above error in Dashboard Designer once you try to start creating scorecards and reports. This is actually quite common – it seems there are a few extra steps to do before you can start using PPS 2010. 

1) Set up the Unattended Service Account. 

Go to the Central Administration page ( on Sharepoint ). Under Application Management , click on Manage Service Applications. Then click on Performance Point Service Application , then Performance Point Service Application Settings. We need to configure the Unattended Execution Account. This is the account that PPS will use to connect to the data source ( unless you use Per User Identity , but thats another story ). If you’ve never seen this page before , there are some interesting options there. Once you set this up and hit Apply. It might be successful, or it might give you another error….

2) The Unattended Service Account cannot be set for the service application.
The Secure Store Service key might not have been generated or properly refreshed
after the service was provisioned.

Now I’m not the expert in the Secure Store Service , but Performance Point uses this to store the password for the Unattended execution account. If you get this error, you need to check that a key has been generated for the Secure Store Service. Once again , go to the Central Administration page, and under Application Management , click on Manage Service Applications. Now click on Secure Store Service. Click on Generate New Key. Once that is done, you can go back to set the Unattended Execution Account on the other page , and Dashboard Designer should then work fine. 

If you still having issue login with farm administrator account and try this steps again.