I can't test this as I don't have the databases available BUT I suspect that this is connected to the fact that the blob will be returned as an Object. So, the first thing I would try would be to cast the column to a oracle.sql.BLOB and then retrieve the bytes from that. Following that, load the byte array to the SQL Server table.
In the tMap try this in the output column feeding the Varbinary column....
((oracle.sql.BLOB)row1.blobcolumn).getBytes()
As I said, this is just the first thing I would try. Let me know if it works.