what is the default RDBMS site set for relational model, what is the database version?
You can try to define connection with JTDS driver http://sourceforge.net/projects/jtds/files/ or JDBC driver from Microsoft.
I did a JDBC-ODBC connection, and i can charge the diagram from the database without problem. The error only occurs when I try to generate the script changes from the diagram. I am using SQLServer 2008.