To fix this SQL Server Management Studio 2008 bug please do the following:
- Open SQL Server Management Studio 2008
- Connect to the database server as normal
- Press F7 to open the "Object Explorer Details" window or click "View" >> "Object Explorer Details"
- In the object explorer details window expand by double click on "Databases"
- Right click on the header bar ("Name", "Policy health state", "Recovery Model", etc) and deselect "Collation" from the menu that will pop up
- From the object explorer, refresh the "Databases"