1.Make sure the Distributed Transaction coodinator is running windows services (Start->Administrative tools->Services)
2.Enable remote connection on MSDTC as below:
Start->Administrative Tools->Component Services->Computer->Mycomputer->right click Mycomputer and select properties->goto MSDTC tab>security configuration->enablt network dtc access. here enable al the remote connections and click ok. The msdtc will be restarted and your query shoul work
cheers