If creating a ModelBuilder connection to an ArcSDE data source, you can always use the Geodatabase and/or Geometric Network connection types when running in the ArcGIS platform. If the ArcSDE has an Oracle database as the back end data store, and ArcSDE has been configured to use Oracle's native geometry type (i.e. SDO_GEOMETRY), you can also use the Oracle connection in ModelBuilder to interact directly with the Oracle data, which has the benefit of being an option in any platform, such as Microstation. However you should not synchronize data from the model out to the Oracle connection if it's the back end of an ArcSDE data source, as that may cause problems for the ArcSDE.