I have the same issue--  note, this problem is due to that the freetds environment NO LONGER PROVIDES tds.h, or libtds.so.   This is a total re-design of freetds, and as such, completely breaks the ability of php to use the -with-mssql option.

The re-design of FreeTDS as outlined above was as of version 0.82.

As documented, the --with-mssql=[freetds dir] will fail, and will complain that the directory is not a freeTDS directory.

This diff is what you want.  --jkl

--- config.m4-new	2008-06-11 20:13:47.000000000 -0400
+++ config.m4	2007-07-03 13:25:34.000000000 -0400
@@ -10,11 +10,11 @@
 
   if test "$PHP_MSSQL" = "yes"; then
     for i in /usr/local /usr; do
-      if test -f $i/include/sybdb.h; then
+      if test -f $i/include/tds.h; then
         FREETDS_INSTALLATION_DIR=$i
         FREETDS_INCLUDE_DIR=$i/include
         break
-      elif test -f $i/include/freetds/sybdb.h; then
+      elif test -f $i/include/freetds/tds.h; then
         FREETDS_INSTALLATION_DIR=$i
         FREETDS_INCLUDE_DIR=$i/include/freetds
         break
@@ -27,10 +27,10 @@
 
   elif test "$PHP_MSSQL" != "no"; then
 
-    if test -f $PHP_MSSQL/include/sybdb.h; then
+    if test -f $PHP_MSSQL/include/tds.h; then
       FREETDS_INSTALLATION_DIR=$PHP_MSSQL
       FREETDS_INCLUDE_DIR=$PHP_MSSQL/include
-    elif test -f $PHP_MSSQL/include/freetds/sybdb.h; then
+    elif test -f $PHP_MSSQL/include/freetds/tds.h; then
       FREETDS_INSTALLATION_DIR=$PHP_MSSQL
       FREETDS_INCLUDE_DIR=$PHP_MSSQL/include/freetds
     else
@@ -38,8 +38,8 @@
     fi
   fi  
 
-  if test ! -r "$FREETDS_INSTALLATION_DIR/$PHP_LIBDIR/libsybdb.a" && 
test ! -r "$FREETDS_INSTALLATION_DIR/$PHP_LIBDIR/libsybdb.so"; then
-     AC_MSG_ERROR(Could not find 
$FREETDS_INSTALLATION_DIR/$PHP_LIBDIR/libsybdb.[a|so])
+  if test ! -r "$FREETDS_INSTALLATION_DIR/$PHP_LIBDIR/libtds.a" && 
test ! -r "$FREETDS_INSTALLATION_DIR/$PHP_LIBDIR/libtds.so"; then
+     AC_MSG_ERROR(Could not find 
$FREETDS_INSTALLATION_DIR/$PHP_LIBDIR/libtds.[a|so])
   fi
 
   PHP_ADD_INCLUDE($FREETDS_INCLUDE_DIR)

same on gentoo linux...
http://bugs.gentoo.org/show_bug.cgi?id=223891 (freetds bug)

I can confirm that above patch makes it possible to compile php-5.2.6 against both freetds-0.64 (i.e. it does not break backward compatibility) and freetds-0.82 (i.e. it works with recent versions).

You can find a whitespace-fixed (bug tracker screwed it up) and direction-fixed (patch had to be applied using -R) version of the patch here: http://overlays.gentoo.org/proj/php/browser/patches/php-patches/5.2.6/php5/mssql-freetds-compat.patch?rev=3485
Credits should still go to jklowden at freetds dot org.

Any way to get this patch in, especially since it does not seem to break backwards compatibility?

Updated patch which covers ext/pdo_dblib as well:
http://overlays.gentoo.org/proj/php/browser/patches/php-patches/5.2.6/php5/freetds-compat.patch?rev=3488

Done by matthias at dsx dot at.

workarround for : there is no tds.h,libtds.so in freetds install 
directory

slackware 12.1 , freetds-0.82, php-5.2.6
freetds-0.82 ./configure --prefix=/usr/local/freetds ;make; make install
then 
cp freetds-0.82/src/tds/.libs/libtds.a  libtds.a  /usr/lib/libtds.a 
then you may go further ...
php ./configure --with-mssql  etc

This bug has been fixed in CVS.

Snapshots of the sources are packaged every three hours; this change
will be in the next snapshot. You can grab the snapshot at
http://snaps.php.net/.
 
Thank you for the report, and for helping us make PHP better.

Fixed in 5.2, 5.3 and HEAD.

Thanks!