So the DLL is now physically on your local machine, and therefore runs on your local machine
Thanks bubba for clarify this!

I agree with you on the first point. However, when you make a reference to the components, you application will try to link to the package on the MTS machine.(quote: When you add the MTransfer component to the Remote Components folders of your local machine..)

If you look at the component, you'll actually see that the component is spinning. Now try this: right click on My Computer on the MMC console, select Stop MSDTC. Then try to run you application again, it'll fail. So I DLLs runs on the server.

If you have another opinion, I would be happy to hear it.

Regards,
TheBao