A transaction is a essential part of every database/application. If a transaction involves more than one server it becomes distributed and this is where MS DTC comes into play. The first step to make a distributed transaction work is to make sure SQL Server can enlist in the local MS DTC and a good place to start is to run the following in Management Studio:

BEGIN DISTRIBUTED TRANSACTION

If MS DTC is not installed or not working properly the above statement will produce an error message and you need to solve this before you can go ahead and test transactions against other servers.

Once the local transaction coordinator is working there are some tools to check if MS DTC is working properly with other servers.

DTC PING is a tool that is used to check that certain ports are open and that name resolution works, if you for example need to run distributed transactions through a firewall.
It can be downloaded here:

http://www.microsoft.com/download/en/details.aspx?id=2868

DTC TESTER is another tool that actually creates and runs a dummy distributed transaction. Over the years i’ve found this tool very reliable and in my experience if this works then you won’t have any problems running distributed transactions.
It can be downloaded here:

http://support.microsoft.com/kb/293799