In a new blog entry, Michael Kimsal points out a driver that Microsoft has released (during the end of last year) that allows PHP5 applications to connect directly to a SQL Server database.
This isn't replacing freetds any time soon. I guess I'm still wondering what the market for "PHP apps deployed on Windows talking to SQL Server" really is - most of the shared hosting accounts I've seen, even on Windows, offer MySQL or Access as the database.
He also points out a video that was shot of the development team talking about the driver (here's their blog too).