OK, here's some more stuff.
First, the driver name in the second parameter must be passed in exactly as you see it in the ODBC control panel when you add a data source from there and it gives you the list of drivers. If the DB2 driver is called "IBM DB2 ODBC Driver (*.db2)", then you must include the " (*.db2)" part in your driver request. See which error code SQLConfigDataSource() returns. If it's ODBC_ERROR_INVALID_NAME, then this is your problem.
Also, the DSN name might have to be different than the driver name, but I'm not sure about that. In any case, it's a good idea for them to be different.
Key/value pairs such as DSN=, DESCRIPTION=, are the same no matter which driver you choose. You might want to try the key DBQ instead of DATABASE (not sure if that really matters). If all else fails, remove all the keys except DSN and DESCRIPTION and see what comes up in the dialog box. If the return value is ODBC_ERROR_INVALID_KEYWORD_VALUE, then your problem is here.
But...
The error message you got back would seem to indicate that the return value is ODBC_ERROR_REQUEST_FAILED. In that case, I don't know what went wrong (and Windows isn't telling us much).