When you have a transaction that spans servers, you have a distributed transaction. Distributed transactions are handled by Microsoft Distributed Transaction Coordinator. This service is not running by default.
In the Control Panel, select Administrative Tools, and then Services. You find MSDTC under D. Right-click and select Start.
If you have the instances on two different computers, you need DTC to be running on both. (And this can be quite a headache to get working.)
[font="Times New Roman"]Erland Sommarskog, SQL Server MVP, www.sommarskog.se[/font]