I've had this problem before. I was using linux and freetds, and the tds version I was using for the DB host was too old. You should have something like this in your freetds.conf:

The 'tds version' line is the most important. If you don't specify a version for a specific host, your system will use the [global] configuration declared in your freetds.conf, which usually uses a much older tds version.