could it be security? does the uer who is inserting/updating into the table also have insert rights on the table in the other database?
maybe these specific statements need EXECUTE AS to make them occur correcty:
UPDATE test1.dbo.tblUser
Set ext = @ext,
ext2 = @ext
where loginname = @user
UPDATE test1.dbo.tblUser2
Set ext = @ext,
ext2 = @ext
where loginname = @user
Lowell