My normal approach to installing vCenter is:

• Create a new drive. Then create an aligned partition on the new drive, format the partition and change its drive letter to D: This is where I normally install the vCenter Server.
• Download and install the SQL Server 2005 Native Client. This enables you to create a DSN to connect to the vCenter database on SQL 2005.
• Create a 32-bit System DSN using the SQL 2005 Native Client.
• Install vCenter Server.

The first issue I ran into was creating a 32bit DSN for vCenter. As Windows Server 2008 R2 is a 64-bit OS, it creates a 64-bit DSN by default when you open the ODBC manager via Administrative Tools. If you create a new System DSN using the ODBC manager from Administrative Tools, you will not be able to select this DSN during the vCenter install as vCenter requires a 32-bit DSN.

The good news is that there is a way around this problem.

In order to create a 32-bit System DSN, you need to launch the ODBC manager from the following location and not just from “Administrative Tools -> Data Sources (ODBC)”:

%systemdrive%\Windows\SysWOW64\odbcad32.exe

This will create a 32-bit DSN.

The second issue I ran into was a little later in the vCenter installation. As the progress bar was moving along, it flagged up with the following error: 

“Error 28035.Setup failed to copy DSACLS.EXE from System folder to '%windir%\ADAM' folder” 

To get around this issue, you'll have to install the .NET Framework 3.5.1 features. Note that you can’t just download it from the Microsoft Site and install it, as it will tell you to use the Role Management Tool to enable .NET Framework 3.5.1 on Windows Server 2008 R2.

So BEFORE, installing vCenter Server, do:

1.       Start -> Administrative Tools -> Server Manager.

2.       From the left pane, select “Features”

3.       On the right hand pane, click “Add Features”

4.       Expand .NET Framework 3.5.1 Features

5.       Select only .NET Framework 3.5.1 (do not select WCF Activation as it will install IIS which conflicts with Apache Tomcat, which of course vCenter will install).

vCenter Server should now install without any issues.

Now, if you'll excuse me, I need to get back to setting up MCSC.