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I think I may have found a better solution, well it seemed to work for me.
I went to the VMWare Update manager SQL instance, and added my VCenter Server machine name$ as a db owner. ie. domain\VCCServer$ as a dbowner for the VMWare Update Manager database. This did the trick.
I noticed in the log files that the machine name needed access..
\Application Data\VMware\VMware Update Manager\Logs:
[2012-01-23 08:08:13:033 'VcIntegrity' 8876 ERROR] [vcIntegrity, 829] Error initializing database: ODBC error: (28000) - [Microsoft][SQL Server Native Client 10.0][SQL Server]Login failed for user 'CORP\MACH$'.
[2012-01-23 08:08:13:033 'VcIntegrity' 8876 ERROR] [vcIntegrity, 767] vim.fault.DatabaseError
Hope this helps!