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I was having the same exact issues as you guys. It happened after we installed vCenter on a new server.
I was getting the same ODBC DOMAIN\COMPUTERNAME$ logon failures.
All my ODBC connection tests were working fine.
Here's why:
On our old vCenter server VUM was using a service account to run, that service account had the correct permissions in the VUM DB.
When another admin installed the new vCenter server + VUM he had set VUM to run as local system. Hence it was trying to authenticate to the SQL DB as DOMAIN\COMPUTERNAME$.
The SQL server of course did not have the permissions set for the computer object to interact with the DB.
I changed the VUM service to use the service account instead of local system. Restarted the services and sure enough update manager began to work.
In short, whatever account the VUM windows service is running as needs to have rights on the VUM DB.