I was installing SP2 on SQL Server 2005 x64 RTM ...Everything went fine but it got stuck at Notification Services and Client Tools .
The error SNIP is :
Error : Failed to install and configure assemblies D:\Program Files\Microsoft SQL Server (x86)\90\NotificationServices\9.0.242\Bin\microsoft.sqlserver.notificationservices.dll in the COM+ catalog. Error: -2146233087
Error message : Unknown error 0x80131501
Error description: MSDTC was unable to read its configuration information. (Exception from HRESULT: 0x8004D027)
So , there was some issue with MSDTC ....and I am no tthe MSDTC guy ......
If you do not install Notification services,reporting services and client tools , MSDTC errror will not pop up ....
Moreover there is an option to retry on the error window .
-> I checked and found that MSDTC service was running fine .
-> I also checked if my account has all the priveleges at the domain level bla bla bla ..
-> Finally , i uninstalled and reinstalled MSDTC [DOS >> msdtc -uninstall and then MSDTC -install >> start MSDTC if its not].
once done , I clicked on retry and it worked just fine ...
We had the similar issue on another server and we resolved it in similar way ...
Hope it helps you too ..