JDBCError: 'ROW_NUMBER' is not a recognized function name

A simple Rails 3 application tries to talk to SQL Server 2000 using
activerecord-jdbc-adapter. I tried both microsoft jdbc driver and jtds
driver. seems to connect to database OK.

when it is time to SHOW data I get this error:

ActiveRecord::StatementInvalid in PencilsController#show

ActiveRecord::JDBCError: ‘ROW_NUMBER’ is not a recognized function
name.: SELECT t.* FROM (SELECT ROW_NUMBER() OVER(ORDER BY [pencils].id)
AS _row_num, [pencils].* FROM [pencils] WHERE [pencils].[id] = 1) AS t
WHERE t._row_num BETWEEN 1 AND 1