Empty Strings: Why or when is '' equal to ' '? Who can explain why 

select case when '' = ' ' then 1 else 0 end, LEN(''), LEN(' '), DATALENGTH(''), DATALENGTH(' ');


yields

----------- ----------- ----------- ----------- -----------
1           0           0           0           1


The funny consequence of this is that in 

create table test ( val varchar(10) );
insert into test values( '' );
update test set val = ' ' where val = '';


the update will indeed replace the empty string by a blank, but the where clause keeps to be true and repeated executions of the update statement tell

(1 row(s) affected)
Trailing blanks explained:


  SQL Server follows the ANSI/ISO SQL-92 specification (Section 8.2,
  , General rules #3) on how to compare strings
  with spaces. The ANSI standard requires padding for the character
  strings used in comparisons so that their lengths match before
  comparing them. The padding directly affects the semantics of WHERE
  and HAVING clause predicates and other Transact-SQL string
  comparisons. For example, Transact-SQL considers the strings 'abc' and
  'abc ' to be equivalent for most comparison operations.
  
  The only exception to this rule is the LIKE predicate. When the right
  side of a LIKE predicate expression features a value with a trailing
  space, SQL Server does not pad the two values to the same length
  before the comparison occurs. Because the purpose of the LIKE
  predicate, by definition, is to facilitate pattern searches rather
  than simple string equality tests, this does not violate the section
  of the ANSI SQL-92 specification mentioned earlier.


Here's a well known example of all the cases mentioned above:

DECLARE @a VARCHAR(10)
DECLARE @b varchar(10)

SET @a = '1'
SET @b = '1 ' --with trailing blank

SELECT 1
WHERE 
    @a = @b 
AND @a NOT LIKE @b
AND @b LIKE @a


Here's some more detail about trailing blanks and the LIKE clause.