When tracing an ODBC connection to previous versions of SQL Server, you would see the following SET statements issued at connect time:
SET QUOTED_IDENTIFIER ON
SET TEXTSIZE 2147483647
SET ANSI_DEFAULTS ON
SET CURSOR_CLOSE_ON_COMMIT OFF
SET IMPLICIT_TRANSACTIONS OFF
When connecting to SQL Server through ODBC or OLE-DB, all of these options, excluding TEXTSIZE, are set by means of a connection flag that tells SQL Server if it is an ODBC or OLEDB connection and will not be seen in any trace output generated using SQL Server Profiler. Although you do not explicitly see the options being set when tracing the server, they are in effect for the connection. In addition, the CONCAT_NULL_YIELDS_NULL option (new in SQL Server 7.0) is set ON. You will still see TEXTSIZE being set when tracing SQL Server.
Versions of the ODBC driver that were created before SQL Server 7.0 (such as the SQL Server 2.65 driver) do not know of the existence of the connection flag. Therefore, if you are using an older version of the driver to connect to SQL Server, you will still see the explicit SET statements being issued.
You can verify the current set options for any connection by selecting the @@options global variable and comparing the value returned with the options listed in the "user options Option" topic in SQL Server Books Online. For more information, please see the following article in the Microsoft Knowledge Base:
INF: How to Determine the Current Settings for @@options