The report does not do any calculation of the sort you are describing. It doesn't look at the in-stock quantity, only calculates from actual ordered products.

You could run some more reports to try and deduce where the issue is originating. For instance, change it from "Product Line Items" to "Order Line Items," leaving all the other criteria the same. Check the orders that appear and make sure you're not missing orders that have sold quantity of your product, and that someone did not, in fact, actually order 1000 of them.