I use both pretty regularly, and am currently studying for my Sql Server MCTS, so I can probably throw a few useful comments in here.
SQL Server is a much, much, much more fully-featured database, especially the 2008 version. MySQL doesn't even support column constraints (for example, creating an int column and then constraining the value to between 1 and 1000 - can't enforce that automatically in MySQL). SQL Server offers full-text indexing, native XML columns and manipulation, multiple transaction modes, complex security offerings, replication and distributed features, and a great management suite.
In regards to your C# comment, yes, SQL Server has the ability to import CLR objects, meaning that you can compile some .Net code and drop it into SQL Server and have database functions that use it. This is especially useful for creating new aggregate functions, as you can bypass cursors and use faster CLR code loops.
You can also optimize SQL Server to the hilt, down to the locking and isolation modes that it uses, and the CPU/memory that a given thread can use.
MySQL, on the other hand, is free and relatively easy to set up, with enough options that most website owners are pretty happy using it for their basic CRUD apps.
If you wish to use Linq2Sql, then you need SQL Server. If you need tons of advanced features, SQL Server is the way to go for sure.
