If you run osql.exe utility on server that does not have SQL server installed, you might get following error: [ODBC Driver Manager] Data source name not found and no default driver specified.
This is because osql utility uses ODBC API to communicate to SQL server and SQL ODBC driver is not installed. To fix this, simple download and install SQL Native Client. For example, if you are using the osql.exe from the SQL 2008 (10.0), you should install the SQL Native Client 10.0 from: http://www.microsoft.com/downloads/en/details.aspx?FamilyID=C6C3E9EF-BA29-4A43-8D69-A2BED18FE73C