Beware Windows 2003 SP2 (Especially if using DTC)

If you are using Distributed Transaction Co-ordinator to manage MS SQL server cross-server transactions across machines which are not in the same domain, be careful when installing Windows 2003 SP2.

To enable cross domain SQL transactions using DTC, it is necessary to drop the required security from "Mutual Authentication Required" to "No Authentication Required".

Quite helpfully, installing Windows 2003 SP2 will cause the security settings for DTC to be reset to the default - "Mutual Authentication Required" - preventing Distributed transactions from occuring.

SQL server will give a really helpul message along the lines of "Unable to enlist in transaction" (which is the same message you get if there are any network issues between the 2 servers).

Only took me 5.5 hours to spot what the issue was - Thanks Microsoft :P