Can clients pick a Muslim ruler if the server has Sword of Islam?
Solution 1:
The Sword of Islam DLC unlocks nothing but the ability to play as Muslims - all other features of the "expansion" - mechanics for Muslim characters, mostly - are actually a free part of the 1.06 patch, and are already a part of all up-to-date CK2 games.
The server needs to own and have active the Sword of Islam DLC for any player to play Islamic characters. Other players don't need to own the DLC to play Islamic characters.