I've just looked at the OVF Tool Documentation and it says that for URLs, the backslash character must be escaped by using %5c instead.

Encoding Special Characters in URL Locators

When you use URIs as locators, you must escape special characters using % followed by their ASCII hex value.

For instance, if you use a “@” in your password, it must be escaped with %40 as in vi://foo:b%40r@hostname,

and a slash in a Windows domain name (\) can be specified as %5c.

So try:

target=vi://DOMAIN%5cUser:PASSWORD@192.168.0.21/Datacenter1/host/esxhost1

where 192.168.0.21 is your vCenter server and the remainder is a reference to your ESX host or cluster.

If that doesn't work, try using the user's UPN instead of DOMAIN\USER.

Let us know if that works.