Turns out an intalled Microsoft Update (KB2661254) was the culprit. This error is related to default SSL certificate installed with ESX 4.0 and prior not meeting 1024 SSL bit requirement that this MS update implements. Default certs are 512-bit in length for at least 4.0 and back. Not sure what default length is for newer versions (1024?)
DPACK uses IE to make the connection on the backend and IE blocks the connection due to 512bit cert. Anyway removing the KB2661254 fixed the issue.