When using the connection manager, we don't see DB2 as a data source type option. Is there a reason why it is not showing? If the connection manager is not the way to set up a DB2 connection, what is the recommended approach? Thanks!

DB2 is not a standard or included product in the framework.  As such, the framework does not rely on its existence.  The Connection String Wizard does not have the DB2 support as it has been our experience that most developers have another mechanism that they want to use for retrieving the connection information and end up providing the connection information manually as Keith had pointed out.