The problem is with executing a stored procedure with a null-value varchar output parameter.

Steps...
1) create any SP that has a varchar(200) input/output param
e.g.
create procedure Test
(
  @TestVarchar varchar(200) = null output
)
as
select @TestVarchar = 'Successful parameter feedback';

2) Run stored procedure using following statements...

$ConnectionObj = mssql_connect($DB_SERVER_NAME, $DB_USER, $DB_PASSWORD);
$aStatement = mssql_init("dbo.test", $ConnectionObj);
mssql_bind($aStatement, "RETVAL", &$RetVal, SQLINT4);
mssql_bind($aStatement, "@TestVarchar", &$Value, SQLVARCHAR, TRUE, TRUE, 200);
$ExecResult = mssql_execute($aStatement);

When PHP executes the SP it defines the parameter as VARCHAR(0) when it should be VARCHAR(200).

I've run SQL Profiler and it shows... 
declare @P1 varchar(0)
set @P1=NULL
exec dbo.test @P1 output
select @P1

when it should be
declare @P1 varchar(200)
set @P1=NULL
exec dbo.test @P1 output
select @P1

If you change the bind statement so that the @TestVarchar parameter is not null then the whole thing works.