Hurray! I figured it out! It is definitely a bug in the installer.
Inside of the vm_vim_ls.log file here is an exerpt to explain the issue:
[2013-01-04 18:38:44,039 main INFO com.vmware.vim.sso.admin.client.vmomi.impl.AdminClientImpl] Client was created successfully
[2013-01-04 18:38:44,039 main TRACE com.vmware.vim.lookup.install.SsoAdminServerConnector] Logged into SSO Admin Session Manager
[2013-01-04 18:38:44,039 main TRACE com.vmware.vim.lookup.install.database.DbConnection] Using JDBC URL from configuration file.
[2013-01-04 18:38:44,366 main INFO com.vmware.vim.lookup.install.PreInstaller] Successful execution for command: Command 'Create LS administrative group' with group name: LSAdministrators
[2013-01-04 18:38:44,507 main DEBUG com.vmware.vim.lookup.install.AssignLsAdminPermissions] Creating SSO administrators group
[2013-01-04 18:38:44,632 main DEBUG com.vmware.vim.lookup.install.AssignLsAdminPermissions] Looking for principal: {Name: __Administrators__, Domain: System-Domain}
[2013-01-04 18:38:45,084 main INFO com.vmware.vim.lookup.install.PreInstaller] Successful execution for command: Command: 'Assign LS administrative permissions' to principal: __Administrators__@null
[2013-01-04 18:38:45,084 main DEBUG com.vmware.vim.lookup.install.AssignLsAdminPermissions] Looking for principal: {Name: admin, Domain: System-Domain}
[2013-01-04 18:38:45,443 main INFO com.vmware.vim.lookup.install.PreInstaller] Successful execution for command: Command: 'Assign LS administrative permissions' to principal: admin@System-Domain
[2013-01-04 18:38:45,458 main TRACE com.vmware.vim.lookup.install.database.DbConnection] Connecting to: jdbc:sqlserver://;serverName=MYSQLSERVER.MYDOMAINNAME.local;port=1433;databaseName=MYDATABASE;integratedSecurity=true;encrypt=true;truststore=C:ProgramDataVMwareSSO.keystore;truststorepassword=MYPASSWORDWITHNUMBERS1234
[2013-01-04 18:38:45,739 main ERROR com.vmware.vim.lookup.install.PreInstaller] Install cannot proceed due to error.
com.microsoft.sqlserver.jdbc.SQLServerException: The driver could not establish a secure connection to SQL Server by using Secure Sockets Layer (SSL) encryption. Error: "java.lang.RuntimeException: Unexpected error: java.security.InvalidAlgorithmParameterException: the trustAnchors parameter must be non-empty".
at com.microsoft.sqlserver.jdbc.SQLServerConnection.terminate(SQLServerConnection.java:1368)
at com.microsoft.sqlserver.jdbc.TDSChannel.enableSSL(IOBuffer.java:1412)
at com.microsoft.sqlserver.jdbc.SQLServerConnection.connectHelper(SQLServerConnection.java:1058)
at com.microsoft.sqlserver.jdbc.SQLServerConnection.login(SQLServerConnection.java:833)
at com.microsoft.sqlserver.jdbc.SQLServerConnection.connect(SQLServerConnection.java:716)
at com.microsoft.sqlserver.jdbc.SQLServerDriver.connect(SQLServerDriver.java:841)
at java.sql.DriverManager.getConnection(DriverManager.java:582)
at java.sql.DriverManager.getConnection(DriverManager.java:154)
at com.vmware.vim.lookup.install.database.DbConnection.createConnection(DbConnection.java:67)
at com.vmware.vim.lookup.install.database.CreateDbSchema.executeStatements(CreateDbSchema.java:107)
at com.vmware.vim.lookup.install.database.CreateDbSchema.execute(CreateDbSchema.java:42)
at com.vmware.vim.lookup.install.PreInstaller.executeCommands(PreInstaller.java:125)
at com.vmware.vim.lookup.install.PreInstaller.installPrimaryNode(PreInstaller.java:111)
at com.vmware.vim.lookup.install.PreInstaller.main(PreInstaller.java:47)
Caused by: javax.net.ssl.SSLException: java.lang.RuntimeException: Unexpected error: java.security.InvalidAlgorithmParameterException: the trustAnchors parameter must be non-empty
at com.sun.net.ssl.internal.ssl.Alerts.getSSLException(Alerts.java:190)
at com.sun.net.ssl.internal.ssl.SSLSocketImpl.fatal(SSLSocketImpl.java:1731)
at com.sun.net.ssl.internal.ssl.SSLSocketImpl.fatal(SSLSocketImpl.java:1692)
at com.sun.net.ssl.internal.ssl.SSLSocketImpl.handleException(SSLSocketImpl.java:1675)
at com.sun.net.ssl.internal.ssl.SSLSocketImpl.startHandshake(SSLSocketImpl.java:1204)
at com.sun.net.ssl.internal.ssl.SSLSocketImpl.startHandshake(SSLSocketImpl.java:1181)
at com.microsoft.sqlserver.jdbc.TDSChannel.enableSSL(IOBuffer.java:1379)
... 12 more
Caused by: java.lang.RuntimeException: Unexpected error: java.security.InvalidAlgorithmParameterException: the trustAnchors parameter must be non-empty
at sun.security.validator.PKIXValidator.<init>(PKIXValidator.java:57)
at sun.security.validator.Validator.getInstance(Validator.java:161)
at com.sun.net.ssl.internal.ssl.X509TrustManagerImpl.getValidator(X509TrustManagerImpl.java:108)
at com.sun.net.ssl.internal.ssl.X509TrustManagerImpl.checkServerTrusted(X509TrustManagerImpl.java:204)
at com.microsoft.sqlserver.jdbc.TDSChannel$HostNameOverrideX509TrustManager.checkServerTrusted(IOBuffer.java:1201)
at com.sun.net.ssl.internal.ssl.ClientHandshaker.serverCertificate(ClientHandshaker.java:1198)
at com.sun.net.ssl.internal.ssl.ClientHandshaker.processMessage(ClientHandshaker.java:136)
at com.sun.net.ssl.internal.ssl.Handshaker.processLoop(Handshaker.java:593)
at com.sun.net.ssl.internal.ssl.Handshaker.process_record(Handshaker.java:529)
at com.sun.net.ssl.internal.ssl.SSLSocketImpl.readRecord(SSLSocketImpl.java:925)
at com.sun.net.ssl.internal.ssl.SSLSocketImpl.performInitialHandshake(SSLSocketImpl.java:1170)
at com.sun.net.ssl.internal.ssl.SSLSocketImpl.startHandshake(SSLSocketImpl.java:1197)
... 14 more
Caused by: java.security.InvalidAlgorithmParameterException: the trustAnchors parameter must be non-empty
at java.security.cert.PKIXParameters.setTrustAnchors(PKIXParameters.java:183)
at java.security.cert.PKIXParameters.<init>(PKIXParameters.java:103)
at java.security.cert.PKIXBuilderParameters.<init>(PKIXBuilderParameters.java:87)
at sun.security.validator.PKIXValidator.<init>(PKIXValidator.java:55)
... 25 more
As you can see, where I configured my jdbc:sqlserver url manually, all of the backslashes to my keystore were removed by the installer. Therefore, my SSL certificates to authenticate with my msSQL server were rendered invalid, causing the installer to error out. As a test, instead of pointing to a keystore to validate the certificate I appended ;encrypt=true;trustservercertificate=true onto my jdbc url and I was able to successfully complete the installation, since I did not need to use a backslash.
-ToTheCloud