This may be too late for you now, but I had this problem as well.

It was due to the fact that the Sybase client was on the server where sqlh2.exe ran & the sybase client was in the PATH enviornment variable before the MS SQLServer.

You can check this by running bcp /v from the command line. If its sybase, try moving the path to the client to the end of the PATH variable.

Cheers

Dan