> I am using optimistic row buffering.
You may need to use table buffering. If you do so, then your commands to DELETE records will go outside the transaction. Once you have finished deleting records, then you'll start the transaction, issue the table update and then close the transaction.

SELECT table1
DELETE some records here

SELECT table2
DELETE more records here

BEGIN TRANSACTION

    SELECT table1
    lOk = TABLEUPDATE( 2, .T. )

    if lOk
        SELECT table2
        lOk = TABLEUPDATE( 2, .T. )
    endif

if lOk 
    END TRANSACTION
else
    ROLLBACK
endif

>The question is where do I put the TABLEUPDATE.
You should place it inside the transaction. Keep in mind that you may not need to put the DELETE commands inside the transaction, though.