Just found the note from VMware today about the possibility of upgrade fail if you are trying to update you ESX 4 to update 1 with update manager.

When attempting to upgrade ESX 4.0 to ESX 4.0 Update 1, you may experience the following symptoms:
  • Update Manager (VUM) upgrade operation fails or times out at 33%.
  • Upon reboot, the host that was being upgraded displays a purple diagnostic screen with the following error:COS Panic: Int3 @ mp_register_ioapi

Who is affected

Customers using VMware vSphere 4 upgrading to Update 1 with 3rd party management agents running.


To avoid this issue, prior to the update, disable all 3rd party management agents running on the ESX 4.0.0 server before applying the update.

Note: The 3rd party management agents can be enabled after the upgrade is completed.

If you have already updated the ESX host, do not reboot the ESX host. Open a support request with VMware support.

WARNING: Rebooting the host means the host has to be reinstalled because it is not recoverable after a reboot.
WARNING: If you have virtual machines running on local storage, they may not be retained if you reinstall ESX 4.0 as a result of this issue. Contact VMware Support for assistance in recovering those virtual machines.
The full KB can be found here