If you have not done so, please go read my article Modern SQL Server & Rails on the Engine Yard blog. I want to thank Wayne E Seguin for inviting me to write the article. This article details many exciting things that have been happening for those using the SQL Server Adapter for Rails, most notably TinyTDS. The article outlines why everyone still using the ODBC connection mode should really switch over to TinyTDS.
Many exciting things are happening thanks to Wayne's new pet project, a ruby and rails installer for Windows. The adapter and TinyTDS will hopefully dove tail into that. The plan is to include components in the one click installer that will allow Windows users to access their legacy databases using TinyTDS and the SQL Server Adapter. We had even talked on the mailing list about including a demo rails app with the ruby windows installer that would access the northwind database much the same way .Net demos would.