I've had a look and Microsoft themselves offer a solution without locks:
This is a simple update with no lock hints, but they say it locks/deadlocks.
Nothing much on SO about this either.
I'd be inclined to add UPDLOCK to your ROWLOCK (as per "table as a queue" (SO) but without READPAST). This will increase isolation in case a second process starts reading.
However, the fact all your processes want to read/write the same row makes me second guess myself. READPAST allows safe concurrency but in this case it's useless.
Note: you can use the OUTPUT clause instead of a second select then you don't need the transaction.
