Interesting that in the explanation for the "correct" answer it states:

Creating a clustered index does involve a rebuild of all the data pages, so this will also change the metadata and free up the space previously taken by Column2.

Stated in the referenced article at

http://msdn.microsoft.com/en-us/library/ms177563.aspx

it states:

Note:

Dropping a column does not reclaim the disk space of the column. You may have to reclaim the disk space of a dropped column when the row size of a table is near, or has exceeded, its limit. Reclaim space by creating a clustered index on the table or rebuilding an existing clustered index by using ALTER INDEX [ http://msdn.microsoft.com/en-us/library/ms188388.aspx ] .

As observed by others, it appears there is more than one way to do this.

🙂