Also think that transactional would be the best. You will only have to create a snapshot one time, and also with transactional replication, you can configure the snapshot agent not to lock the tables that is bcping out, because it uses the log reader.

Remember that transactional will only replicate the transactions made to the published tables.

If you still can't run the snapshot agent, I would suggest to check if the agent is being lock by a user connection. While you are running the snapshot agent, run a sp_who2 to see if it is locked?

Are you running the distribution server and the publisher on the same box?