Some good points, and it is true (for example) that Query Analyzer against a SQL Server 2000 instance gives the result using REAL as 0.12345671 but no matter how you CAST the result, the result of the DECIMAL calculation is 0.123457 (i.e. rounded to six decimal places) so the REAL result is, in the wording of the question ("In the example below, which data type will give the most accurate answer?") more accurate. I don't see how the answer could possibly be DECIMAL (0.123457 decimal is much further from 0.1234567 (correct) than 0.12345670908689499 (real, unadjusted for precision))?

Using REAL in this case does give exactly the right displayed answer in SSMS (though not in other tools as you say) and when working with approximate data types we do need to be careful about the significant digits (as demonstrated by SSMS). Anyway, the main point of the question is for people to be aware of the limitations of the fixed-precision types, and in particular to avoid using excessive scale.