Explain different types of cursors.
Types of cursors: Static, Dynamic, Forward-only, Keyset-driven. See books online for more information.

What are the disadvantages of cursors? How can you avoid cursors?
Disadvantages of cursors: Each time you fetch a row from the cursor, it results in a network roundtrip, where as a normal SELECT query makes only one rowundtrip, however large the resultset is. Cursors are also costly because they require more resources and temporary storage (results in more IO operations). Furthere, there are restrictions on the SELECT statements that can be used with some types of cursors.
Most of the times, set based operations can be used instead of cursors. Here is an example:
If you have to give a flat hike to your employees using the following criteria:
Salary between 30000 and 40000 -- 5000 hike
Salary between 40000 and 55000 -- 7000 hike
Salary between 55000 and 65000 -- 9000 hike
In this situation many developers tend to use a cursor, determine each employee's salary and update his salary according to the above formula. But the same can be achieved by multiple update statements or can be combined in a single UPDATE statement as shown below:
UPDATE tbl_emp SET salary =
CASE WHEN salary BETWEEN 30000 AND 40000 THEN salary + 5000
WHEN salary BETWEEN 40000 AND 55000 THEN salary + 7000
WHEN salary BETWEEN 55000 AND 65000 THEN salary + 10000
END
Another situation in which developers tend to use cursors: You need to call a stored procedure when a column in a particular row meets certain condition. You don't have to use cursors for this. This can be achieved using WHILE loop, as long as there is a unique key to identify each row. For examples of using WHILE loop for row by row processing, check out the 'My code library' section of my site or search for WHILE.

Write down the general syntax for a SELECT statements covering all the options.
Here's the basic syntax:
SELECT select_list
[INTO new_table_]
FROM table_source
[WHERE search_condition]
[GROUP BY group_by_expression]
[HAVING search_condition]
[ORDER BY order_expression [ASC | DESC] ]

What is a join and explain different types of joins.
Joins are used in queries to explain how different tables are related. Joins also let you select data from a table depending upon data from another table.
Types of joins: INNER JOINs, OUTER JOINs, CROSS JOINs. OUTER JOINs are further classified as LEFT OUTER JOINS, RIGHT OUTER JOINS and FULL OUTER JOINS.

Can you have a nested transaction?
Yes, very much. Check out BEGIN TRAN, COMMIT, ROLLBACK, SAVE TRAN and @@TRANCOUNT

What is an extended stored procedure?
An extended stored procedure is a function within a DLL (written in a programming language like C, C++ using Open Data Services (ODS) API) that can be called from T-SQL, just the way we call normal stored procedures using the EXEC statement. See books online to learn how to create extended stored procedures and how to add them to SQL Server.

Can you instantiate a COM object by using T-SQL?
Yes, you can instantiate a COM (written in languages like VB, VC++) object from T-SQL by using sp_OACreate stored procedure. Also see books online for sp_OAMethod, sp_OAGetProperty, sp_OASetProperty, sp_OADestroy. For an example of creating a COM object in VB and calling it from T-SQL, see 'My code library' section of this site.

What is the system function to get the current user's user id?
USER_ID(). Also check out other system functions like USER_NAME(), SYSTEM_USER, SESSION_USER, CURRENT_USER, USER, SUSER_SID(), HOST_NAME().

What are triggers? How many triggers you can have on a table? How to invoke a trigger on demand?
Triggers are special kind of stored procedures that get executed automatically when an INSERT, UPDATE or DELETE operation takes place on a table. 
In SQL Server 6.5 you could define only 3 triggers per table, one for INSERT, one for UPDATE and one for DELETE. From SQL Server 7.0 onwards, this restriction is gone, and you could create multiple triggers per each action. But in 7.0 there's no way to control the order in which the triggers fire. In SQL Server 2000 you could specify which trigger fires first or fires last using sp_settriggerorder
Triggers can't be invoked on demand. They get triggered only when an associated action (INSERT, UPDATE, DELETE) happens on the table on which they are defined.
Triggers are generally used to implement business rules, auditing. Triggers can also be used to extend the referential integrity checks, but wherever possible, use constraints for this purpose, instead of triggers, as constraints are much faster.
Till SQL Server 7.0, triggers fire only after the data modification operation happens. So in a way, they are called post triggers. But in SQL Server 2000 you could create pre triggers also. Search SQL Server 2000 books online for INSTEAD OF triggers. 
There is a trigger defined for INSERT operations on a table, in an OLTP system. The trigger is written to instantiate a COM object and pass the newly insterted rows to it for some custom processing. What do you think of this implementation? Can this be implemented better?
Instantiating COM objects is a time consuming process and since you are doing it from within a trigger, it slows down the data insertion process. Same is the case with sending emails from triggers. This scenario can be better implemented by logging all the necessary data into a separate table, and have a job which periodically checks this table and does the needful.

What is a self join? Explain it with an example.
Self join is just like any other join, except that two instances of the same table will be joined in the query. Here is an example: Employees table which contains rows for normal employees as well as managers. So, to find out the managers of all the employees, you need a self join.

CREATE TABLE emp 
(
empid int,
mgrid int,
empname char(10)
)

INSERT emp SELECT 1,2,'Vyas'
INSERT emp SELECT 2,3,'Mohan'
INSERT emp SELECT 3,NULL,'Shobha'
INSERT emp SELECT 4,2,'Shridhar'
INSERT emp SELECT 5,2,'Sourabh'
SELECT t1.empname [Employee], t2.empname [Manager]
FROM emp t1, emp t2
WHERE t1.mgrid = t2.empid
Here's an advanced query using a LEFT OUTER JOIN that even returns the employees without managers (super bosses)
SELECT t1.empname [Employee], COALESCE(t2.empname, 'No manager') [Manager]
FROM emp t1
LEFT OUTER JOIN
emp t2
ON
t1.mgrid = t2.empid 

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