>When I add a record (from VFP app) to SQL Server database table, field of type SmallDateTime gets value "1/1/1900". Is this by design? The field is set to allow NULLs so I thought that if I leave the date blank, it will set the value to NULL.

The empty date value is not the same as NULL and neither ODBC driver nor SQL Server support empty dates. You've to ommit that field from insert or pass null.