Had the same problems with working upgrade from 7.2 to 7.3. Clean install or upgrade fails. I had to move back to 7.2 so I could research more.
Based on what I have had time to diagnose it appears to be possible issue with jtds version 1.3.0 used in HP SIM 7.3.
During SIM 7.3 the install will connect to SQL successfully and will even create a DB, but when the SIM Service starts it will not connect so the the rest of the install / upgrade fails because I believe it is using differnt JDBC modules.
My thought is the installer is using JTDS v1.2 modules still and then service is using v1.3.0 modules based on trying to grap the install temp directory contents that are created C:\InstallTemp
Part of the hpsim.log showing 1.2 module usage during HP SIM 7.3 installation/upgrade
md /c cd C:\InstallTemp & set JAVA_HOME=.\jre & set PATH=.\ & .\jre\bin\java -cp ".;.\jtds-1.2.jar"
I tried updating module to jtds 1.3.1 as well due to release bug fixes included to address sql connectivity to see if I could get service to start but still fails.
Tried all the articles on using useNTLMv2=TRUE in config files.
Tried copying dlls up to the root install folder to replace versions as called out in other forums / kb articles.
HP documentation is not the greatest for calling out Debug logging settings.
My configuration
Single Server Deployment - Windows Server 2008 R2
HP SIM 7.2 Update 2
SQL 2008 R2 (not express)