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If you use Windows Authentication to login to the database you've to change the user with which the Update Manager service start on the virtual center. You've to put the username/password of the user that can connect to the database (by default Update Manager start with Local System account. When installing if the vCenter Server is on Windows 2008 I think you should also use the FQDN of the vCenter server (or the ip address) to be sure it get the right address (something to do with IPv6 on Windows 2008) . At least this worked for me.