MS recommends to create an emty, not used ODBC connection on the Sequencer Image before Sequencing to avoid the issue you faced. ("Sequencing Guide" at http://technet.microsoft.com/en-us/appvirtualization/cc843994.aspx)
If "a" ODBC connection already is part of the Sequencer Image, the Registry Hive "ODBC.INI" is considered as "pre-exisiting" for the Sequencer and thus it only virtualizes keys underneath of it.
If "ODBC.INI" is not part of the Sequencer image, it gest created during Sequencing and the Sequencer fully virtualizes it - and therefor this "empty" or "wrong" ODBC connection overhelms any Local ODBC entry.
Also when using Dynamic Suiting you should have an empty ODBC connection before Sequencing, because otherwise on Virtual Envoronment's ODBCs could overwrite all other ODBCs...
Falko