The TeamCity documentation recommend Case Sensitive MS SQL database (http://confluence.jetbrains.com/display/TCD7/Setting+up+an+External+Database#SettingupanExternalDatabase-MySQL). All versions documentations above TeamCity 5.x seems to have this and 4.x and below don’t mention it.
However, there are several support queries where the recommended collation is Case Insensitive:
Which way do we go ?
Can you please verify if SQL_Latin1_General_CP1_CI_AS is usable.