Surely you can simply

DECLARE @oldDate varchar(10) = '0980423'

SELECT

DATEFROMPARTS

(

convert(Int,LEFT(@oldDate,3))+1900 --Year

,Substring(@oldDate,4,2)--Month

,Right(@oldDate,2)--Day

)

The output is a DATE datatype, this obviously assumes the data is correctly formatted and clean.

As others have said if you are converting the field to a new DB you might as well start changing the datatypes as well where necessary.

EDIT : I didn't see Steves suggestion until just now.