It definately should lock records involved in a transaction. It is the most important purpose of transactions. There are only 2 reasons it wouldn't do locking during your transaction.

1. your Transaction Isolation Level. You may need to modify the Transaction Isolation Level above 'READ COMMITED'. BTW running at lower levels is bad.

2. This all goes out the window though if your DBD doesn't use SQLServer transactions and impliments it's own. I don't know what DBD you're using, but this should be easy to verify. You can read the DBD or rewrite your sql to include 'BEGIN TRANSACTION;' at the beginning of your first statement and ';COMMIT TRANSACTION;' at the end of your last. This way you know that the SQLServer transactions are called. Then test it out.

UPDATE: Clarify things a little