Yes, connecting to an unencrypted SQL database through an on-premises data gateway can be problematic, and what you're experiencing is consistent with current security requirements enforced by Microsoft. The gateway is designed to default to encrypted connections (using TLS/SSL) for data protection, and if your SQL Server doesn't support encryption or is configured to reject encrypted connections, the gateway connection attempt will typically fail—even if the credentials are correct.
While in the past there may have been unsupported workarounds through configuration changes, Microsoft now strongly recommends and essentially requires secure connections, especially in enterprise environments. Although there may not be a specific KB article that outright states unencrypted connections are blocked, official documentation and community discussions make it clear that encryption is the expected norm. The most reliable solution would be to enable encryption on your SQL Server instance, ideally with a trusted certificate, to ensure compatibility and maintain secure data transmission.
