The Sybase CTLIB client will always parse a passthrough sql statement weather or not we (Delphi, BDE, SQL Links, etc.) issue an 'open' or 'exec'. If a SELECT is found to be the FIRST word, it (Sybase CTLIB) will try to create a cursor hence the error message. There is a workaround. Place a comment in front of the SQL text like so:

CHANGE
  select * into #temptable from oldtable
TO
  /**/select * into #temptable from oldtable