i did. I added network service under the C drive permissions with full permissions.
The jointool.log is giving me this
[2013-09-11 11:29:14,206 com.vmware.vim.jointool] Failed to find instance config at: "C:\ProgramData\VMware\VMware VirtualCenter\instance.cfg", assuming defaults
[2013-09-11 11:29:14,222 com.vmware.vim.jointool] Storage directory not found in instance.cfg.
[2013-09-11 11:29:14,347 com.vmware.vim.jointool] Initializing DB datasource from: vcdb with dsn: VMware Virtualcenter 5.1 as user: vpxadmin
[2013-09-11 11:29:14,362 com.vmware.vim.common.vdb.VdbConfig] Config name=vcdb
[2013-09-11 11:29:14,362 com.vmware.vim.common.vdb.VdbConfig] Property file=C:\ProgramData\VMware\VMware VirtualCenter\vcdb.properties
[2013-09-11 11:29:14,362 com.vmware.vim.common.vdb.VdbConfig] Loaded url from props=jdbc:sqlserver://db.domain.com;databaseName=vcenter51
[2013-09-11 11:29:14,362 com.vmware.vim.common.vdb.VdbConfig] Overrides=
[2013-09-11 11:29:14,362 com.vmware.vim.common.vdb.VdbConfig] prop:password
[2013-09-11 11:29:14,362 com.vmware.vim.common.vdb.VdbConfig] prop:dsn
[2013-09-11 11:29:14,362 com.vmware.vim.common.vdb.VdbConfig] prop:username
[2013-09-11 11:29:14,487 com.vmware.vim.jointool] DB datasource initialized.
[2013-09-11 11:29:14,487 com.vmware.vim.jointool] JoinTool started
[2013-09-11 11:29:14,487 com.vmware.vim.jointool] Storage directory for LDAP instance: C:\ProgramData\VMware\VMware VirtualCenter\\VMwareVCMSDS
[2013-09-11 11:29:14,487 com.vmware.vim.jointool] Operation Mode: initialize
[2013-09-11 11:29:14,737 com.vmware.vim.jointool] Recovery info : Connection to DB succeeded
[2013-09-11 11:29:14,799 com.vmware.vim.jointool] Recovery info : ID : 1073755291 Date : 2013-09-11 11:24:13.583 Change Id : 221251
[2013-09-11 11:29:14,799 com.vmware.vim.jointool]
Database LDAP backups found. Launching recovery mode.
[2013-09-11 11:29:19,510 com.vmware.vim.jointool] Verifying local VC linked mode capability
[2013-09-11 11:29:19,510 com.vmware.vim.jointool] Retrieving local license key from: ldap://127.0.0.1:389/ ldap://[::1]:389/ for VC instance: 8B7430CE-9BB0-4484-86CD-A705AA60DAD4
[2013-09-11 11:29:21,570 com.vmware.vim.jointool] Verifying remote VC linked mode capability
[2013-09-11 11:29:22,365 com.vmware.vim.jointool] Retrieving license key from: ldap://VC2.domain.com:389/ for remote VC instance: ED0AC852-FC13-44CA-96DE-FA6AAAC184EE
[2013-09-11 11:29:22,475 com.vmware.vim.jointool]
Key:01012-4E046-N8J43-0U1R4-9H5L4
DormantLicenseFilesPath:C:\Program Files\VMware\Infrastructure\VirtualCenter Server\licenses\site
[2013-09-11 11:29:22,506 com.vmware.vim.jointool]
Restoring as a replica instance.
[2013-09-11 11:29:22,943 com.vmware.vim.jointool] Deleted remote entry under CN=Servers,CN=Default-First-Site-Name,CN=Sites for PAVC$VMwareVCMSDS
[2013-09-11 11:29:22,943 com.vmware.vim.jointool] Creating directory services instance VMwareVCMSDS
[2013-09-11 11:29:22,943 com.vmware.vim.jointool] LDAP port = 389
[2013-09-11 11:29:22,958 com.vmware.vim.jointool] Base DN = dc=virtualcenter,dc=vmware,dc=int
[2013-09-11 11:29:22,958 com.vmware.vim.jointool] Storage dir = C:\ProgramData\VMware\VMware VirtualCenter\VMwareVCMSDS
[2013-09-11 11:29:34,316 com.vmware.vim.jointool] Operation "Recover" failed: : Action: Recover LDAP instance
Action: Create replica instance
Action: Create Instance
Problem: Creation of instance VMwareVCMSDS failed: Active Directory Lightweight Directory Services could not replicate the directory partition CN=Schema,CN=Configuration,CN={AD2076D4-5E30-4771-B944-805A8F356E9A} from the remote Active Directory Lightweight Directory Services instance VC2.domain.com:389.
Error code: 0x80072108
The source server is currently rejecting replication requests.
[2013-09-11 11:29:34,316 com.vmware.vim.jointool] Recovering from failed Operation "Recover"
[2013-09-11 11:29:34,316 com.vmware.vim.jointool] Recovery successful
[2013-09-11 11:29:34,316 com.vmware.vim.jointool] Execution error.