In the Data Modeler readme file states the following :-
"Strings encoded and stored in UTF in your existing database system must be converted into ANSI during the reverse engineering. See ADO and ODBC settings for details."
Can you explain what this means? Does it mean we must downgrade any columns that are currently Nvarchar to varchar?
No, it is not necessary to change data types Nvarchar to varchar. It's just a warning that all "descriptions" and other similar items stored in the database in UTF will have to be converted to ANSI. Toad Data Modeler is not able to load UTF descriptions.