Believe it or not, we spent 12 hours on phone support with VMware and dealt with 3 different engineers on 2 different shift to resolve this problem. 
Anyways, to recap the problems and resolution.
1. We had problem finishing VMware Update Manager with error specified and has done pretty much a lot of steps but couldn't solved it for 9 straight hours.
2. We tested clean install virtual center server and components on a virtual machine and things works fine with SQL 2005 Express instead of DB created in SQL 2005 Enterprise.
3. We went back to original physical virtual center server and wipe out all VMware components and didn't work.
4. Eventually we wipe it clean and remove all registries, application data and temp folder and finally able to install Update Manager but problems with license server and always pop up weird message like "vim.Fault.NoHost" etc..
5. We spent time removed cluster, reconfigured HA, disconnect ESX hosts and didn't work always have same error message.
6. Finally 3rd VMware engineer took over for 3 hours and handled it with problems lies to some how license component cached somewhere screw in the systems and finally solved it.
7. Update Manager works fine and ESX clusters works normal and license server doesn't have any issue.
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Regards,
Stefan Nguyen
iGeek Systems Inc.
VMware, Citrix, Microsoft Consultant
