There is nothing inherently wrong with doing file handling from within a T-SQL script when needed , and it is possible to set the security on the windows system and on the SQL Server in such a way that it would be just as secure as using .NET code. I have in fact used precisely the technique this article describes to create schema.ini files on an as needed basis in conjunction with using opendatasource to read text files on a non-production system.

While there are certain situations where this is a good technique though, it will not often be the best technique. Depending on the amount and type of information being processed there will very often be a better answer. If it is information the user will need immediately, it is probably better to return it immediately through whatever interface is used. If it is say a report meant to be picked up and read the script could be sent to e-mail it instead of leaving it in a file. If it is a large amount of information then something along the lines of DTS, SSIS, or BCP would be more appropriate.

The technique does have its place, but it is rarely the best one.