Symptoms
Issue:
Workflow does not start when an item is added to a SP List (as per configuration)
Diagnoses
Diagnosis:
As per ticket 90740 the server did not start in console mode. MSDTC was not configured properly.
Resolution
Resolution:
We used this document to configure the settings http://help.k2.com/onlinehelp/K2blackpearl/ICG/current/webframe.html_MSDTC.html_tracksearch=msdtc_configuration
Then we had to uninstall MSMQ and install it again for the server to pick up the changes.
This solved both issues.