The Latest v3 SQL Server Adapter now supports Azure
http://groups.google.com/group/rails-sqlserver-adapter/browse_thread/thread/50dc2108c4fda584?hl=en

You must use the latest DBLIB/TinyTDS connection mode which also means 
you must use the latest FreeTDS compiled with OpenSSL. All the details 
are here.

http://github.com/rails-sqlserver/activerecord-sqlserver-adapter/wiki/Using-Azure
http://github.com/rails-sqlserver/activerecord-sqlserver-adapter/wiki/Using-TinyTDS

I realize some of this may be only informative for IronRuby in an 
indirect way. It is also worth pointing out that FreeTDS/TinyTDS will 
soon be available as precompiled libs for Windows with the 
RailsInstaller project too.

 - HTH, Ken

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