1) Enable MS DTC in the Add/Remove Programs app in Control Panel ( it's under Windows Options --> Application Server --> Details. This service is no longer enabled by default in the Windows setup.
2) You have to set up a resource for the MS DTC service. ( Read about it here, in the transcript portion: http://support.microsoft.com/default.aspx?scid=kb;en-us;888121 )
3) UNINSTALL TERMINAL SERVICES ON ALL NODES!! ( Even if you don't think you installed it in the first place!! )
4) TURN OFF VIRUS SCAN SOFTWARE ( and any other unecessary services that may be running)
5) Make sure you set up a server alias via the Client Network Utility on the node from which you're doing the installation BEFORE launching setup app. Make sure your service account has rights to log in to both nodes.