Kindly download the proper Native client from the below link.
Install the same and take ODBC 64-bit. Create a new System DSN with the newly installed Native Driver. Initiate the VUM installation again.
For Windows vCenter 6.5 ; vCenter DB and VUM DB are supposed to be separate DB's with 2 different DSN's for them .
You should use the 64-bit ODBC Native Client (ENU\x64\sqlncli.msi)
Update Manager DB is installed on seperate instance it does not use the vCenter DB.
With Update Manager installation it gives the sql express edition which you can install for small scale env. where you are using 5 ESxi and 50 VMs.
However for an env. larger that above mentioned configuration it is recommended to use full sql version.
Below articles will provide you guidelines for the installation of Update manager with embedded DB and preperation of the SQL DB if using External.
Update Manager Database Requirements
Update Manager with embedded sql express.