I just had trouble with using BCP out via xp_cmdshell. Probably serves me right but that's a different issue. I got a strange error message 'Unable to resolve column level collations' which turned out to be a bit misleading. I wasted some time comparing the collations of the the server, the database and all the columns in the query. I got so desperate that I even read the Books Online article. Still no joy but then I tried the interweb. It turns out that calling bcp without qualifying it with a path causes Windows to search the folders listed in the Path environment variable - in that order - and execute the first version of BCP it can find. But when you do an in-place version upgrade, the new paths are added on the end of the Path variable so you don't get the latest version of BCP by default.

To check which version you're getting execute bcp -v at the command line. The version number will correspond to SQL Server version numbering (eg. 10.50.n = 2008 R2). To examine and/or edit the Path variable, right-click on My Computer, select Properties, go to the Advanced tab and click on the Environment Variables button. If you change the variable you'll have to restart the SQL Server service before it takes effect.