The error is normally generated when migrating the applications or code segments that used to run prior to SQL Server 2012 to later versions of SQL Server 2012 (Because it was deprecated in SQL Server 2012).
- When can you get it ?
 When the SQL script was created in earlier versions before SQL Server 2012 ()i.e compatibilty mode < 110). So installation of older databases like pubs, northwind fail.
- When trying to create a sharepoint 2003 site (WSS 2.0) collection as it relies on this system stored procedure using SQL Server 2012
- when configuring reporting services for sharepoint 2010 (non SP1) using SQL Server 2012 (SQL 2012 only works with SP 2010 SP1 or higher) – so slipstream SP1 for Sharepoint 2010 installation
- When configuring ACM (audit and control management) server for Sharepoint
- When creating WebMarshal database
Solution:
replace the occurrence of sp_dboption with ALTER DATABASE statement manually.
Please see attached sp_dboption SQL file when needed.


Great explanation and fix. Version 2 helped me to fix my “Could not find stored procedure sp_dboption” issue. Many thanks for sharing this valuable information