Consider a simple blob mapping:

@Lob
private java.sql.Blob data;

Using the jTDS driver an exception is thrown when such an entity is stored.

SQLFeatureNotSupportedException: Method not implemented

I tracked the problem down to org.hibernate.type.descriptor.sql.BlobTypeDescriptor where in line 151 the method java.sql.PreparedStatement.setBinaryStream(int, InputStream, long) is called.

The problem here is that this method was introduced in JDBC4 (Java 6).
In JDBC3/Java 5, the methods signature is java.sql.PreparedStatement.setBinaryStream(int, InputStream, int)

Note the last parameter being int instead of long.

Work-around available: Use the official Microsoft JDBC4 driver