Using MS-SQL 2008 & Stash 1.31 and the database migration wizard (after a clean install using the embedded hsql db), a new DB for stash set to SQL_Latin1_General_CP1_CI_AS for collation (CI = case insensitive) made the database migration wizard spit out the following error when I clicked "Test":
Stash requires a case sensitive database, but the target database is case insensitive. For information about configuring databases for use with Stash, please refer to the Stash documentation.
I set the database to SQL_Latin1_General_CP1_CS_AS, yet Stash's DB migration wizard continues to insist it's still case insensitive. I restarted Stash, it still says the DB is case insensitive. I took the DB offline and then back online, and Stash still says it's case insensitive.
I put some dummy chars in the name of the database, and Stash's DB migration wizard still says the "the target database is case insensitive". So I'm thinking it's not querying the database, it's querying the server default. And since this is a multi-tenant DB server, the owners prefer it to be SQL_Latin1_General_CP1_CI_AS by default. Regardless, this server also hosts a Jira database, which has to be set case insensitive.
Your products should work together a little better, Atlassian.
I can't go forward with this tool until I have it using a real database. After a couple hours of mucking around, I'm answering my own question, but it's not an optimal answer.
Stash apparently stores its external database configuration in a stash-config.properties file, in the root of the stash_home folder. When you install Stash using HSQL, it doesn't create the file. The absence of the file in fact prompts Stash to use its embedded HSQL DB.
Atlassian documentation (https://confluence.atlassian.com/display/STASH/Stash+config+properties) gives an example for a Postgres file - I looked at a Fisheye config file that uses MS-SQL and cobbled together one for Stash that also uses Windows authentication, like thus:
I saved the file, restarted Stash and the web UI was back on the initial setup questions, this time populating a MS-SQL DB instead of HSQL.
So I'm "working", but there still seems to be a bug here. The migration wizard appears to be querying the server's collation, not the database's collation. Blindly crafting a config file to bypass faulty logic != acceptable workaround.
I posted this question & eventual answer on the Atlassian Answers forum, and Atlassian support down-voted my workaround; in at least v1.31, Stash's case sensitivity check is bypassed once the stash-config.properties file is present & valid, so I'm playing with fire here ;)
I'll mark it as answered. Someone else can create a defect ;)