A Foreign Key Constraint establishes a relationship between two tables, ensuring referential integrity by enforcing that values in one table must exist in another table's specified column. This constraint maintains the integrity of the relationship between tables. 

Database Services in DB2 architecture primarily handle data storage management tasks such as organizing data on disk, managing buffer pools, and allocating storage space efficiently to optimize performance and resource utilization. 

User-defined functions (UDFs) play a crucial role in database queries by simplifying complex logic. They allow for modularization of code, enhancing query readability, and facilitating code reuse. 

Relationships in an Entity-Relationship Diagram (ERD) depict the associations between entities. They represent how entities are connected or related to each other in the database schema. Examples of relationships include "owns," "works for," or "is part of." 

Concurrent transactions are handled simultaneously in DB2, allowing multiple users to access and manipulate data concurrently without waiting for each other. This concurrency control mechanism enhances system throughput and user satisfaction. 

DB2 replaces invalid characters with a specified replacement character. When dealing with XML data, DB2 has a feature to handle invalid characters within tags by replacing them with a specified replacement character, which can be customized based on the user's requirements. This ensures that the XML remains well-formed and can be processed without errors. 

Troubleshooting installation errors involves checking system requirements, reviewing installation logs for errors, verifying network connectivity, and ensuring administrative privileges for installation. 

The Lock Manager in DB2's architecture plays a crucial role in ensuring data integrity by enforcing concurrency control mechanisms. It coordinates the access to shared resources such as database objects by multiple transactions, ensuring that only one transaction can modify a particular resource at a time to prevent conflicts and maintain data consistency. This helps in preventing issues like data corruption or inconsistent results due to concurrent access. 

The Federation Server component in DB2 facilitates the integration of DB2 with external systems. It enables access to distributed data sources as if they were within a single database, enhancing interoperability. 

Option 2: Combining tables - Denormalization involves combining normalized tables into fewer tables to reduce the number of joins required in queries. By doing so, the database architect can decrease the complexity of queries, leading to improved query performance. However, it's essential to carefully analyze the trade-offs, such as potential data redundancy and update anomalies, before implementing denormalization. This option is correct because combining tables is a fundamental step in denormalizing a database schema to optimize query performance.