Linked server problem.

instcat is used to update the catalog SPs which get the database schemas for various things so would have something to do with the area you have problems.

Are both servers sp2?

What do you mean when you say 'write any select query from one server to another' - a query over a linked server?
I would suspect that you have ended up with incompatible servers in that case or one has some corruption - maybe a failed service pack. The best solution is probably to make sure all servers are at the same level.Yes. Both servers are having SQL 7 SP2 and MDAC 2.5 SP1 version (This config is forced to keep since our major clients are having same version). both service packs didn't resulted any errors during installation.

I am executing a select statement from server 1 to server 2

for ex. following query running from server 2. the database restored a copy from server 2.

select col1, col2 from server1.database.dbo.tablename

if I execute from server 1 the following query is working fine.

select col1, col2 from server2.database.dbo.tablename

Please let me know if you have any answer. Thanks for your kind help.