Hello Kurt,
I have just tested XAL 3.5 SP5 with 3.55.1 kernel on my Windows 7 64-bit and I don't get the warning about wrong ODBC driver.
However I would recommend running with XAL 3.8.1.351, which was the last kernel released for XAL.
The kernel can be downloaded from PartnerSource.
Best Regards
Henrik Hansen [MSFT]