update category set chrCat_Full_Name='Vinyl powder free gloves' where 
+chrCategory_Code='VINYLPF' Vinyl powder free gloves
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(note: i'm going to assume that trailing "Vinyl powder free gloves" is a copy/paste error)

what does $db2->Error() say?

Taking a closer look at your debugging, you have:

$db2->Sql($sql2)|| die("Query error");
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Reading the docs for Win32::ODBC, it says that ->Sql() "Returns ? on success, or an error number on failure." .. apparently (after looking at the source) they meant s/\?/undef/ ... BUT you have that '||' in there, so on _success_ it's going to die. You need to change it to something like:

  my $rc = $db2->Sql($sql2);
  die sprintf("Query error!! RC: %s ; Error: %s ; SQL: %s", $rc, $db2-
+>Error(), $sql2) if $rc;
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As i mentioned above, DBI/DBD is far superior for this because of placeholders... and radiantmatrix below was kind enough to post a sample porting of your code -- be sure to review it...

Update: oops .. forgot the "if $rc" on there ... and changed $Sql->Error() to $db2->Error()

my $rc = $db2->Sql($sql2);
  die sprintf "Query error!! RC: %s ; Error: %s ; SQL: %s", $rc, $Sql-
+>Error(), $sql2;
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This solution worked for me but without second line. Second line gave me an error saying that i cant call method Error on undefined value. Thank you guys for your help. From what i've read around net DBI looked much easier to read but i just couldn't get it to work. I will give it a shoot again and will see what happens.