Yes, SQL Server rounds time to 3.(3) milliseconds:
SELECT CAST(CAST('2009-01-01 00:00:00.000' AS DATETIME) AS BINARY(8))
SELECT CAST(CAST('2009-01-01 00:00:01.000' AS DATETIME) AS BINARY(8))
0x00009B8400000000
0x00009B840000012C
As you can see, these DATETIME‘s differ by 1 second, and their binary representations differ by 0x12C, that is 300 in decimal.
This is because SQL Server stores the time part of the DATETIME as a number of 1/300 second ticks from the midnight.
If you want more precision, you need to store a TIME part as a separate value. Like, store time rounded to a second as a DATETIME, and milliseconds or whatever precision you need as an INTEGER in another columns.
This will let you use complex DATETIME arithmetics, like adding months or finding week days on DATETIME‘s, and you can just add or substract the milliseconds and concatenate the result as .XXXXXX+HH:MM to get valid XML representation.