Hello,
What if the solution you proposed does not work? I followed your instructions and still getting this annoying "Service initialization failed" error in the Service Health tab. Since SMS doesn't work I can't even verify what is going wrong by checking out the sms.log file (last log in this file is dated back to the day when we performed vCenter upgrade).
Starting/stopping Profile-Driven Storage Service does not throw any errors/exceptions, the service itself seems to be starting fine.
I changed the Local System account to the same domain account that vCenter Server operates on, restarted all services, restarted whole server, still nothing. Where should I start digging?