To be honest, I haven't found the time to test this since my last post, but I wanted to suggest that if you are not already doing this, test the map by setting up the properties and right clicking on Validate Map, and then Test Map if there are no errors. Are you getting errors in this phase, or are your problems strictly when you run the app?
I like this feature because you get to make incremental changes and test several times a minute if necessary. Obviously there is a lot to setup when it comes to testing a DB connection, beyond the UDL, but in this situation we should be avoiding problems such as the wrong version of BizTalk for the OS, and bad configuration. We're merely checking the connection to SQL and that the Transform works, as simple as it may be.
I'm not really sure what additional questions to ask beyond, what else works or doesn't work so we know where to go. This should obviously be a simple problem to solve but I think we're missing a few key pieces of information. If you're new to BizTalk, then maybe it is something as simple as installation and configuration, but it’s hard to tell without knowing your system was installed using prescriptive guidance from Microsoft.