SQL Server 2008 and constant expressions
SQL Server optimizer does constant folding, when possible. But is not a black-or-white issue, there are many shades of gray. See Compute Scalars, Expressions and Execution Plan Performance or Troubleshooting Poor Query Performance: Constant Folding and Expression Evaluation During Cardinality Estimation. You also need to read Conor vs. Runtime Constant Functions to get a grasp what is 'constant' in SQL to start with.

See http://rusanu.com/2009/09/13/on-sql-server-boolean-operator-short-circuit/ for an example when SQL Server does not do boolean short-circuit.