We have a web service on server #1 and a database on server #2. Web service uses transaction scope to produce distributed transaction. Everything is correct.

And we have another database on server #3. We had some problems with this server and we reinstalled operation system and software. We configured MSDTC and tried to use web service from server #1 to communicate with database on this server. And now after first select statement within transaction scope we get: "The operation is not valid for the state of the transaction". This exception falls in every web service request if it is using transaction scope. Server #2 and Server #3 is almost similar. The difference can be only in settings. .NET framework 3.5 SP1 installed and SQL Server SP3 on all servers.

Full stacktrace:

System.Transactions.TransactionState.EnlistPromotableSinglePhase(InternalTransaction tx, IPromotableSinglePhaseNotification promotableSinglePhaseNotification, Transaction atomicTransaction) ? System.Transactions.Transaction.EnlistPromotableSinglePhase(IPromotableSinglePhaseNotification promotableSinglePhaseNotification) ? System.Data.SqlClient.SqlInternalConnection.EnlistNonNull(Transaction t ? System.Data.SqlClient.SqlInternalConnection.Enlist(Transaction t ? System.Data.SqlClient.SqlInternalConnectionTds.Activate(Transaction transaction) ? System.Data.ProviderBase.DbConnectionInternal.ActivateConnection(Transaction transaction) ? System.Data.ProviderBase.DbConnectionPool.GetConnection(DbConnection owningObject) ? System.Data.ProviderBase.DbConnectionFactory.GetConnection(DbConnection owningConnection) ? System.Data.ProviderBase.DbConnectionClosed.OpenConnection(DbConnection outerConnection, DbConnectionFactory connectionFactory) ? System.Data.SqlClient.SqlConnection.Open() ? NHibernate.Connection.DriverConnectionProvider.GetConnection() ? NHibernate.Impl.SessionFactoryImpl.OpenConnection()

I searched this message but didn't found any appropriate solution. So what settings should I check and what exactly should I do to fix it?