The distributor is the server containing the distribution database,
and this database must be tuned in the same manner as any other SQL Server database.
You can enhance the performance of the distributor by properly sizing it,
sizing is not always an easy task.
The distributor should have enough capacity to handle extra work.
The distributor is the link between the publishers and the subscribers
and should be configured so that it is not a bottleneck.
Some tips for configuring and tuning the distributor are provided here:
* Tune the I/O subsystem
Ensure that the distributor, like any other SQL Server system, has sufficient I/O capacity.
Use a multiprocessor system CPU power is not usually a problem
because in most cases, operations that take place on the distributor are not extremely CPU intensive.
However, you should use at least two CPUs to allow concurrent operations to take place.
* Tune the operating system
Configure the Server service to maximize throughput for network applications.
This will configure the memory system to favor applications over file services.
You make this setting through the Network icon in Control Panel.
Also, remove any services that won't be used, such as IIS and FTP services.
* Monitor the distributor during snapshot replication
When snapshot replication is running,
including when the initial snapshot is being copied in transactional and merge replication,
a large number of I/O operations will occur at one time.
Because so much data is being written to the distributor,
the distributor's I/O subsystem might become overloaded.
If this happens, the time it takes to apply the snapshot will increase.
Therefore, you should monitor the distributor during the transmission of the snapshot.
* Tune SQL Server
Source: Microsoft SQL Server 2000 Administrator's Companion Book