SQL Server could not create a subscription for Subscriber: MSDTC on server is unavailable.

When I configured a subscription for Transactional replication with updatable subscription, the following error occurred.

SQL Server could not create a subscription for Subscriber 'DINESH-PC\SQL2008Instance2'. MSDTC on server 'DINESH-PC\SQL2008INSTANCE2' is unavailable.

I did not want to set the subscription for Immediate Updating mode, so set to Queue changes and commit when possible.

I am aware that MSDTC is used for Immediate Updating (Simultaneously commit changes). Then why I am getting such error? I did not select that option.

The reason is the wizard. When the subscription is created through the wizard, whatever the selection you make, it makes both Immediate Updating and Queued Updating available for subscription. If you do not want both, do not use the wizard, create the subscription manually using stored procedures. Note that you can use the wizard for generating scripts for the whole task without creating the subscription. The generated script contains four stored procedures;

• sp_addsubscription: This adds a subscription to publication and it has to be run in publisher. You need to make sure that @update_mode is set as ‘queued tran’.
• sp_addpullsubscription: This adds a pull subscription to subscriber, hence needs to run in subscriber. Just like previous one, make sure that @update_mode is set as ‘queued tran’.
• sp_link_publication: This is to use with Immediate Updating, hence you do not need to execute this.
• sp_addpullsubscription_agent: This adds a scheduled agent job to synchronize pull subscription with transactional publication. Run it in subscriber.

Once you run everything, you have a subscription with queued updating mode.