Here is what I would start with: I would guess it might be a DLL call that is not working correctly somewhere in the report generation.
Are you using the DLL implementation to generate the Text report body? Try switching to the Sequence option to generate the report.
I dont know TestStand 3.1, but I believe it may be under the Configure->ReportOptions.
Under the 'Report Generator for Producting the Report Body' select the Sequence radio button.
Try to step through the reportgeneration with a small text file and see if you can pinpoint the exact location.
Good lluck,
PH