Hi Wasim,
My team is testing a similar deployment within our lab.
You are not doing anything incorrectly, the error you are experiencing "Error 20010: Failed to update lookupservice" is an nice feature of VMware's buggy un-tested software.
We have had a support case open with VMware for 1 month and has finally been escalated to the software engineering team. Our experience with support has been very unsatisfactory (Found it difficult to find anyone in support who was trained in vSphere 5.1 installation). Hopefully an update can be supplied by the software engineering team and we don't have to wait another month 
I will post in this thread if we receive a solution/workaround from VMware.
My advise is stick with vSphere 5, or if you must proceed with vSphere 5.1 deploy it in simple mode.
If you want to raise your own support call with VMware please feel free to reference SR 13269807601