If you're unsure about the error message ODBC is giving you (or, rather, the message SQL Server is sending via ODBC to DBI), have your DBA examine SQL Server's error logs (or whatever equivalent service it offers) to determine the nature of the failure.

In addition, if you're getting error messages in Unicode, perhaps SQL Server is expecting data in Unicode format? That certainly seems odd, since I'd expect something like ODBC to be independent of such things, but it's worth looking into I guess.