First up we have a trio of issues, all of which have been fixed with a single cumulative patch. There are two exploitable buffer overrun vulnerabilities, one of which allows an attacker to run arbitrary code, and a registry stuff-up enabling the SQL Server service to write to the registry and specify another account, like LocalSystem, say and have OS-like privies.
The buffer overrun in the authentication and password encryption functions would allow an attacker to execute code in the context of the service account, which the registry exploit could easily escalate. The attacker would have to log on and be able to load and run a query on the server, or be able to pass uncontrolled information into an existing query on the system. The second buffer overflow vuln exists in the bulk insert procedure, which allows data files to be copied into a table. The attacker would have to be a member of the bulk administrators group, which by default has no members. The registry problem allows for privilege escalation, but the changes won't take effect until the service is restarted.
SQL Server 2000 (all editions) and SQL Server Desktop Engine (MSDE) 2000 are affected. The MS bulletin with links to the required patch is posted here.
Next we find that the installation routine for the server and the service packs makes it possible to store unencrypted and poorly-encrypted administrator passwords in the setup.iss and log files (sqlstp.log and/or sqlsp*.log), which can be accessed by nosey third parties other than the admin.
Anyone who can log on to the machine may be able to find the SA password in clear text or ready for some trivial cracking. The fix here is to move the files to a protected directory, or delete them, or run an MS utility called killpwd.exe which will scan the files for passes and delete them.
SQL Server 7, including MSDE 1.0 and SQL Server 2000 are affected. The MS bulletin is posted here. ®