Correct me if I am wrong, but wasn't SAS forced to take over the staff of Linjeflyg. From what I understand Swedish law says that when a company takes over another then the employees have to go with it.
Regarding the SC guys hired pre-97 then I heard that they actually have to do a simple interview before getting accepted into SAS Airline. You might say, "why shouldn't they do the full thing?" Well, because the company already knows who they are from several years of employment.
I have done the SAS tests a few years ago and I found them very fair and generally relevant. I know that there are good pilots out there who are just as good as any SAS pilot even though they weren't accepted. We all have less fortunate days but when you go for an interview they only look at how you perform that particular day. I'm sure everybody could pass the SAS tests if given 10 chances but it is understandable that the company doesn't want to waste it's time again and again hoping that you will have your lucky day.
I don't think, though, that a NO is necessarily a NO. I have heard of at least one guy who didn't do too well on the A300 sim. SAS felt it was lack of experience and told him to re-apply after gaining some jet hours.
BTW, SAS is not the only airline with strict interview procedures. The same goes for BA, KLM, Lufthansa and most other major European airlines.