Undo Insert/ Update

Hi
Can somebody advice me on this:

I am trying to update a row, which is being pulled from another table.

i.e., I have two tables T1 and T2

I am getting a row from T2 and inserting it in T1
then I am updating that row in T1

What i want is if in case these is an error while updating this row I want to remove the row from T1
T1 and T2 are same.

declare @err1 int

--BEGIN TRANSACTION

INSERT INTO dbo.T1 SELECT * FROM dbo.T2 WHERE UpdateFlag = 'Y' AND ID = '12345'

BEGIN TRY

UPDATE dbo.T1 set ReportDate= '9910-12-2006'

SET @Err1 = @@error

END TRY

BEGIN CATCH

insert into errorlog values (error_message())

END CATCH



--if @err1<>0

--begin

--Rollback transaction

--end


This work fine but I am not able to roll back the transaction

When I activate the codes fro roll back, it not performing the Logging operation in CATCH also terminating

REQUIREMENT

1) Get the record in T1 from T2
2) Update the record in T1
3) IF step:3 good commit it, else remove the only the row which was pulled from T2. It must do this also log in dbo.ErrorLog the errored system message error_message()

Thanks a lot in advance