As someone else mentioned, there is a good chance the the problem has nothing to do with FreeTDS.

Have you monitored the MS-SQL server during heavy load to see what it is doing? There could be any number of reasons why heavy load causes the system to appear to hang, with the primary cause being locking issues.

If this is a web site, are you using mod_perl? If so, are you using Apache::DBI? If not, why?

Michael