Update 22nd June 2009: I’ve just encountered yet another issue trying to get MSDTC working. The culprit this time was a rogue entry in the hosts file (C:\WINDOWS\system32\drivers\etc\hosts) which had an incorrect IP address specified for the server I was trying to ‘DTC Ping’.
I encountered yet another MSDTC issue when talking to a remote SQL Server database following a BizTalk 2006 development environment upgrade from Windows Server 2003 Ent. Ed. to Service Pack 1.
The usual ‘Mutual authentication required’ / ‘No Authentication Required’ problem reared its head, and although this needed to be resolved, I was still receiving the ‘New transaction cannot enlist in the specified transaction coordinator‘ error when BizTalk attempted to do anything involving a distributed transaction. Even with a fresh installation and reconfiguration of MSDTC, I still couldn’t successfully run the DTCPing tool – the RPC test ran fine, but the Binding test failed every time:
As discussed in this blog entry by Romualdas MSDTC additionally requires ‘NetBIOS over TCP/IP’ functionality enabled on the network adapter/s participating in the DTC transaction – this setting is disabled by default when using static IP addresses:

Because MSDTC uses NetBIOS to resolve remote machine names (rather than DNS Fully Qualified Names which is a little odd reading this O’Reilly article), the DTCPing Binding test was unable to resolve the machine initiating the call and hence the failure of the test. Setting the network adapter to enable NetBIOS over TCP/IP resolved the issue (no restart was required).
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