Thanks a lot for the response. Yes I am picking SQLNCLI10 and not SQLNCLI11. I am able to see the tables and views once the connection is established, but I am not able to do the SELECT as it gives the MC DTC error.

The same SQL 2000 and SQL 2012 are working fine with SQL 2008 when we create linked server, so I dont think there is issue with MC DTC configuration... What you think might be the issue? Do you suggest that I should install SQl2008 and then upgrade to SQL2012 instead of installing a new copy?