Strange Query Analyzer Decision - Question

We have SQL server 7 installed. And we experiencing the performance problem.
When I tried to solve this problem I have found the interesting thing:
We have the table S_EVT_ACT with the non clustered index
S_EVT_ACT_F4 created on [OWNER_PER_ID], [APPT_REPT_FLG] fields and another clustered one
S_EVT_ACT_M4 created on [ROW_STATUS], [OWNER_PER_ID] fields
I use the next select statement and before run this statement I declare the variable @P1 - @P5 and set the values to them:

declare @P1 as char(1)
declare @P2 as char(1)
declare @P3 as char(1)
declare @P4 as varchar(10)
declare @P5 as char(1)

set @P1 = 'Y'
set @P2 = 'Y'
set @P3 = 'N'
set @P4 = '1-K56'
set @P5 = 'Y'

SELECT
..
...
...
FROM
dbo.S_EVT_ACT T1 --(index = S_EVT_ACT_F4)
LEFT OUTER JOIN dbo.S_CONTACT T2 ON T1.TARGET_PER_ID = T2.ROW_ID
LEFT OUTER JOIN dbo.S_OPTY T3 ON T1.OPTY_ID = T3.ROW_ID
LEFT OUTER JOIN dbo.S_ORG_EXT T4 ON T1.TARGET_OU_ID = T4.ROW_ID
LEFT OUTER JOIN dbo.S_EVT_ACT_X T5 ON T1.ROW_ID = T5.PAR_ROW_ID
WHERE
((T1.ALARM_FLAG = @P1 OR T1.APPT_REPT_REPL_CD IS NOT NULL) AND
(T1.APPT_REPT_FLG = @P2 AND (T1.CAL_DISP_FLG = @P3 OR T1.CAL_DISP_FLG IS NULL)) AND
(T1.OWNER_PER_ID = @P4) AND
(T1.TEMPLATE_FLG != @P5 OR T1.TEMPLATE_FLG IS NULL))
ORDER BY
T1.CREATED

In this case Query Analyzer uses S_EVT_ACT_M4 index and the performance is bad!

But when I try to run the same statement and use hard code 'Y' instead of the variable @P2 the Query Analyzer uses the S_EVT_ACT_F4 index and performance is PERFECT.

Question: What the difference between using variable @P2 and hard code 'Y' in the select statement and how to configure SQL server to use the right index in the situation when I can't change the Select statement and use the hard coding?

Any Idea will be very Appreciated.

Dmitri Denejkine
stssystems
MS SQL Server DBA, MIS
(514) 426-0822 ext. 2676