"If you have connection files that were created prior to 10.1, they will still work. However, if you need to create a new connection to your geodatabase using an ArcSDE service, use the Create ArcSDE Connection File geoprocessing tool."
This is a much more long-winded process - some this simple should not require the use of a tool. Moreover, you cannot "Test Connection" like you used to be able to.
Alternatively, "ArcSDE" could be added to the list of possible options in the "Add Database Connection" drop-down.
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