Those are actually independent.  The value for the "Null Type" of the business object properties does not always match the value of the "Allow Nulls" in the database.  The "Null Type" for the BO field determines how the Get/Set of the field property will handle a DBNull.Value property that it encounters.  Those values are pulled from the StrataFrame database meta-data and are not retrieved from SQL Server.

As to the error you are receiving, I am not sure... Is the business object mapped to a DDT source or directly to SQL Server? 

The "Null Type" topic was my mistake, sorry for that.
I have the Business Object created in the same Windows Application and mapped to the DDT I also tested mapping it to the Development Sever with the same results.

So I created a Business object library apart from the Windows project and the added a new Business Object class. The result for the mapping was successful then. So I guess the mapping is not working if the class is inside the Windows project itself, at least for me.

I think that you have something else going on here.  The BOs work the same in an application as they would in a BO library.  So that you can troubleshoot where you are having a problem, create a new SF Application, add a BO, map it and build the project and you will see that it works without issue.  You can then start bringing over your BOs one at a time to see what the problem was.  It could be that your Windows App was not created as an SF application or you could be missing some references.  Regardless, it is always best to store your BOs in a library instead of the App assembly anyway.  Glad you got it going