The regression was introduced by making byte type signed.

Bitwise OR (|) applied to signed char (byte) and any longer type reqires the former to expand to the same size.
When the char is negative it is expanded with sign bit filling the extra bytes causing the unexpected result.

These are signaled by -Wall

Three different pointer types are used for strings.

SQLCHAR pointer - used against ODBC driver
char pointer - used against erl_interface
byte pointer - used internally

SQLCHAR is 'unsigned char' while erl_interface is 'signed char'

byte pointer should probably not be used at all.

odbcserver.c:2772:12: warning: implicit declaration of function 'tolower' is invalid in C99
      [-Wimplicit-function-declaration]
                str[i] = tolower(str[i]);
                         ^

and supplied incorrect data to stdin. A crash example:

echo -en "\x0\x0\x0\x1\x0" | ./odbcserver