I found the culprit!
The Windows locale is different in Server2 from that everywhere else in my environment.
On Server2 it is English/Canada.
On the rest of my env it is English/US.
This affects the default SQL collation setting according to this link: http://msdn.microsoft.com/en-us/library/ms143508.aspx.
For English/Canada the default collation setting is Latin1_General_CI_AS.
For English/US the default collation setting is SQL_Latin1_General_CP1_CI_AS
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