You get the above message and you are already logged on as the user who has full permission to the SQL Server group . We got this error when we were configuring a new server in our production environement . I had faced this problem before but I had forgotten the solution . So I blog it here so that any lost souls get the benefit . This is a know problem when configuring Biztalk in a multiple computer configuration . You need to enable network client access DTC before you start configuration or your configuration WILL FAIL !!
This is documented in MSDN Biztalk trouble shooting section .
Multiple computer configuration using Windows Server 2003 or Windows XP
Problem: If you attempt to run the Configuration Wizard on Windows Server 2003, or Windows XP, and point to a remote SQL server, the configuration will fail.
Resolution: You must enable network clients DTC access before configuring BizTalk Server. This is required for the distributed transactions performed by BizTalk Server components to work.
Important The following procedure must be run on each of the computers in the multiple computer configuration.
To turn on DTC Access
From the Start menu, double-click Control Panel, double-click Administrative Tools, and then double-click Component Services.
Expand Component Services, and then expand Computers.
Right-click the computer you need to set, and from the context menu select Properties.
In the Properties window, select the MSDTC tab.
In the Transaction Configuration area, click Security Configuration.
In the Security Settings area, select the Network DTC Access check box.
In the Security Settings area, check the Network Clients check box.
Click OK on each open dialog box.
Restart your computer to enable the remote DTC option.
Warning This configuration could take up to 15 minutes.
Hope that gets you back on track .. Leave me a comment in any case