Looks to me like a collation problem with the installation of SQL server. The first is a Windows collation the second is a SQL version of the collation. This can also be caused by regional settings such as English(United States) and English(United Kingdom).

I'm not quite certain how this got mixed up in DotNetNuke unless SQL was installed with different defaults.  If you are only testing, I would simply reinstall SQL server and make sure the regional settings do not change.

WARNING: NOT NOT ATTEMPT ANY CHANGES WITHOUT A COMPLETE BACKUP.

The only thing I can suggest it verify the collation using SQL Server Management Studio. First check the server properties and note the collation method then compare that to the database properties. While it looks like you can change the collation method it is not an easy task.

You might try installing a brand new installation of a DotNetNuke database for testing to see what collation method is used.

I have heard of this problem with SQL Standard Edition before but not with Enterprise Edition and also from upgrading from SQL 2000. Obviously there is something more complicated going on here. Add the complexity of a production server... I'm afraid no one enjoys being stuck in such a bad position. 

Here is a script to check your esiting databases:

select name, collation_name, compatibility_level from sys.databases

Enter this in the Host|SQL and click Execute to see the results.

I'm sorry that I don't have a better answer for you.