I was having problem using this new model Transaction handling in .net 2.0, better than going to Enterprise services for just transaction handling, way it prmotes itself from Lightweight to full DTC XACT transparently helps a lot. Yeah i did bump into some posts pointing an bug that is currently open in this model, but that's not my issue today.
When i run the test app in Win XP SP2 connecting to 2 different SQL 2K server on Win 2K3, i got the following error "Network access for Distributed Transaction Manager (MSDTC) has been disabled." After some googling, enabled inbound/outbound transaction in DTC security settings and ended up with different error message, this happends when connection is opened
"The transaction has already been implicitly or explicitly committed or aborted", this one was tough, after lot of hit-n-miss i turned off firewall and it started working. Ahhhh.... WTH