Not a bug in SQL Server because you can choose a different collation when you are setting up SQL Server. It is more of a human bug for not checking how to do a proper setup.
To change a server collation:
export all the data and script all the users.
drop the databases and rebuild the master using the correct collation
recreate the users and databases and import the data
Collations are hierarchical. By that I mean they can be easily over-ridden.
A database collation can be set to operate differently from the server and a column can be set to operate differently from its database. A piece of code can be set to operate according to the collation of the object from which it is pulling data.
MS example: SELECT name FROM customer ORDER BY name COLLATE Latin1_General_CI_AS. (I changed the collation name from the MS example to make it more relevant)
The problem here was PBCK.DLL; not SQL Server.
Sorry to be bobby badnews but I would like to see articles that are consistent with MS documentation when it is correct and consistent with the behavior of SQL Server when it is administered correctly.