Is UDPLOCK using Row-locks? I have a UPDATE statement that is using a UPDLOCK inside a DTCTransaction to avoid deadlocks. 

Now I was wondering. is it locking on a Row-level or on a Table-level?
Now I was wondering if it is locking on a Row-level or on a Table-level?

From BOL

UPDLOCK
Specifies that update locks are to be taken and held until the transaction completes. UPDLOCK takes update locks for read operations only at the row-level or page-level. If UPDLOCK is combined with TABLOCK, or a table-level lock is taken for some other reason, an exclusive (X) lock will be taken instead.
When UPDLOCK is specified, the READCOMMITTED and READCOMMITTEDLOCK isolation level hints are ignored. For example, if the isolation level of the session is set to SERIALIZABLE and a query specifies (UPDLOCK, READCOMMITTED), the READCOMMITTED hint is ignored and the transaction is run using the SERIALIZABLE isolation level.

Also have a look at Designing Transactions and Optimizing Locking

WITH (UPDLOCK) This hint is used in DML statements to cause SQL Server to acquire update locks instead of shared locks. The update locks acquired will be held for the remainder of the transaction. Update locks are compatible with shared locks but are not compatible with other update locks. Therefore, SELECT statements that acquire update locks will be blocked, while SELECT statements that only intend to read the data, and not change it, are allowed. WITH (UPDLOCK) is usually specified if data is to be read first and updated later. Because of this, it can be referred to as a “SELECT WITH INTENT TO UPDATE”.