We use SQL Server 2008 and Accpac ERP 5.5A. In database setup, I can specify a data source (for example, a SQL Native Client data source) or I can directly enter the SQL server hostname.

If that's my choice: use a Native Client data source, or specify the database directly, which is best?

Native Client is the best driver.  When you select the server in Database Setup, it will create a DSN named {servername}32.  When this DSN is created, if it's not a Native Client, then delete it, and recreate it with the same name and the Native Client driver.  Then, you can pick the server in database setup.