TransactionScope Limitations And MS DTC

I am receiving an error message while using the System.Transactions.TransactionScope class.  The error message that I am receiving is "Communication with the underlying transaction manager has failed".  This error seems to only appear when I have my web application one server, Server1,  and my database on a second, Server2.  When I run the web app on the same server as the database (i.e., web site and database on Server2), I don't receive this error.  So, this leads me to believe this has something to do with MS DTC. 
 Is there a limit to how much data MS DTC can manage for a given transaction?  If so, is it configurable?
 When I run my code, the application fails after a certain number of steps (this is repeatable). See sample code below.  When I execute the code below, the error occurs on UpdateBody2();.  If I comment out UpdateBody2(), the error will now occur on UpdateBody3();, and so on.  This leads me to believe that I have hit some upper limit.
 
My code follows a pattern similar to this:

using {TransactionScope scope = new TransactionScope())
{
    UpdateHeader();
    UpdateBody1();
    UpdateBody2();
    UpdateBody3();
    UpdateFooter();
}

Where each of the classes follows a pattern of:
UpdateHeader()
{
    using (SqlConnection conn = new SqlConnection())
    {
    conn.Open();
    // Do something 
    conn.Close();
    }
} 
Environment:
ASP.NET 2.0
SQL/2005 Standard
Windows Server 2003  
Thanks.
Steve