Leaving aside the issue of the limitations placed on the Wizards (which may be more on the honour system than any real limitation), let's take a trip into speculation land; using the full power available to him, could Gandalf defeat Sauron in a direct confrontation?
Without the Ring? Doubtful
Gandalf himself certainly doesn't think so (emphasis mine):
I have spoken words of hope. But only of hope. Hope is not victory. War is upon us and all our friends, a war in which only the use of the Ring could give us surety of victory. It fills me with great sorrow and great fear: for much shall be destroyed and all may be lost. I am Gandalf, Gandalf the White, but Black is mightier still.'
The Two Towers Book III Chapter 5: "The White Rider"
And this is Gandalf the White, who had undergone an "enhancement" of his powers; it seems unlikely that Gandalf the Grey would have been more confident.
Additionally, as pointed out in Lord Bubbacub's answer, Gandalf lacked confidence in his abilities even when he was Olórin:
Manwë replied that he wished Olórin to go as the third messenger to Middle-earth (and it is remarked in parentheses that "Olórin was a lover of the Eldar that remained," apparently to explain Manwë's choice). But Olórin declared that he was too weak for such a task, and that he feared Sauron.
Unfinished Tales Part Four Chapter II: "The Istari"
None of which exactly inspires great confidence.
With the Ring? Possibly
Tolkien talks about this in his Letters; although he's coy on whether or not Gandalf could actually turn the Ring against Sauron, he does say that Gandalf would be one of the few for whom it would be a plausible goal:
Sauron would not have feared the Ring! It was his own and under his will. Even from afar he had an effect upon it, to make it work for its return to himself. In his actual presence none but very few of equal stature could have hoped to withhold it from him. Of 'mortals' no one, not even Aragorn.
Of the others only Gandalf might be expected to master him – being an emissary of the Powers and a creature of the same order, an immortal spirit taking a visible physical form. In the 'Mirror of Galadriel', 1381, it appears that Galadriel conceived of herself as capable of wielding the Ring and supplanting the Dark Lord. If so, so also were the other guardians of the Three, especially Elrond. But this is another matter. It was part of the essential deceit of the Ring to fill minds with imaginations of supreme power.
Confrontation of Sauron alone, unaided, self to self was not contemplated. One can imagine the scene in which Gandalf, say, was placed in such a position. It would be a delicate balance. On one side the true allegiance of the Ring to Sauron; on the other superior strength because Sauron was not actually in possession, and perhaps also because he was weakened by long corruption and expenditure of will in dominating inferiors. If Gandalf proved the victor, the result would have been for Sauron the same as the destruction of the Ring; for him it would have been destroyed, taken from him for ever.
The Letters of J.R.R. Tolkien 246: To Mrs. Eileen Elgar (draft). September 1963
Assuming Gandalf was capable of turning the Ring against Sauron, he would have defeated him just as surely as had the Ring been destroyed. Of course, this would introduce whole new problems, but that's neither here not there