node.js Syslog server recording to MS-SQL database
From a once over:


Comments should be worth the space they take up, my favourite offender is this one:

// open the database connection
sql.open(conn_str, function (err, conn) {

I want to point to is msnodesql maintained?
I also want to point out that storing uid/pwd in your script can be dangerous, I hope this is not a production database, which does not have sensitive data
As Nelson Menezes mentioned, you should look into using prepared statements
In this block, you should either use 1 comma separated var or semicolons:

var message = msg.toString().replace(/'/g, "''") 
var src = rinfo.address.toString().replace(/'/g, "''")
var s = "insert into Incoming(Source,Message) values('"+src+"','"+message+"')";

In a script of this size I would consider merging some statements, this

console.log(s);
console.log(err);
return;


might as well be

return console.log(s, '\n', err);

});// end of sql.open() &lt;- Overkill comments


Still, all in all a solid script.