Sergio,
2 things come to mind.
1)Transactions are overused when really not needed and deadlocks are occuring.
2)Connections using very different connection strings and thus connection pooling is not much of a benefit.
PS: I don't check event logs much and I don't know if default event monitoring logs those or not. However SQL server errorlog would record them. Check that log. You might want to graph with SQL server profiler and/or trace (flags 1204/1222? - recheck flag numbers yourself).
Cetin

>A web application using sql server 2005 having the following problem :
>
>The CPU utilization goes through the roof and the SQL 2005 server stops accepting transaction requests. The database is rather small. The table with the most transactions (insert/updates) has about 115,000 rows. The concurrent users to the website are about 600 users. And the transactions are about 10 – 15 per second. The HP server has four processors and 4GB of memory. Right now we have allocated 2GC fro SQL and have been trying to up its allocated memory unsuccessfully.
>
>
>The only thing ‘new’ in the event log is:
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>Source: DCOM
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>Event ID: 10016
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>User: NT AUTHORITY\NETWORK SERVICE
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>The application-specific permission settings do not grant Local Activation permission for the COM Server application with CLSID
>
>{BA126AD1-2166-11D1-B1D0-00805FC1270E}
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> to the user NT AUTHORITY\NETWORK SERVICE SID (S-1-5-20). This security permission can be modified using the Component Services administrative tool
>
>
>Any help is appreciated.
>
>Thanks,
>Sergio