This is what I've learned so far from my research.
.NET sends in connection settings that are not the same as what you get when you log in to management studio. Here is what you see if you sniff the connection with Sql Profiler:
-- network protocol: TCP/IP
set quotedidentifier off
set arithabort off
set numericroundabort off
set ansiwarnings on
set ansipadding on
set ansinulls off
set concatnullyieldsnull on
set cursorcloseoncommit off
set implicittransactions off
set language us_english
set dateformat mdy
set datefirst 7
set transaction isolation level read committed
I am now pasting those setting in above every query that I run when logged in to sql server, to make sure the settings are the same.
For this case, I tried each setting individually, after disconnecting and reconnecting, and found that changing arithabort from off to on reduced the problem query from 90 seconds to 1 second.
The most probable explanation is related to parameter sniffing, which is a technique Sql Server uses to pick what it thinks is the most effective query plan. When you change one of the connection settings, the query optimizer might choose a different plan, and in this case, it apparently chose a bad one.
But I'm not totally convinced of this. I have tried comparing the actual query plans after changing this setting and I have yet to see the diff show any changes.
Is there something else about the arithabort setting that might cause a query to run slowly in some cases?
The solution seemed simple: Just put set arithabort on into the top of the stored procedure. But this could lead to the opposite problem: change the query parameters and suddenly it runs faster with 'off' than 'on'.
For the time being I am running the procedure 'with recompile' to make sure the plan gets regenerated each time. It's Ok for this particular report, since it takes maybe a second to recompile, and this isn't too noticeable on a report that takes 1-10 seconds to return (it's a monster).
But it's not an option for other queries that run much more frequently and need to return as quickly as possible, in just a few milliseconds.