SQL Server 2008 R2 Service Broker Troubleshooting
The way you run ssbdiagnose in the post it would connect to the database MyDatabase on localhost and search for the initiator and target service. You mention that you've set up for two different instances, so the correct command line should be something like:

ssbdiagnose CONFIGURATION\
  FROM SERVICE /test/initiator -E -S &lt;instance1&gt; -d &lt;db1&gt;\
  TO SERVICE /test/target -E -S &lt;instance2&gt; -d &lt;db2&gt;


(I used the unix style command line terminators to prettify the code. You should use a single line).

When the connection params are pulled out ahead of the CONFIGURATION keyword they apply to every connection (FROM, TO).