Atmospheric transient eddy dynamical forcing (TEDF)-driven midlatitude unstable air-sea interaction has recently been recognized as a crucial positive feedback for the maintenance of the extratropical decadal variabilities. Our previous theoretical work by Chen et al. (2020) characterizes such an interaction with building an analytical midlatitude barotropic atmospheric model coupled to a simplified upper oceanic model. This study firstly extends the analytical model to a two-layer quasi-geostrophic baroclinic atmospheric model coupled to a simplified upper oceanic model and then identifies the roles of vertical distributions of atmospheric TEDF and diabatic heating in midlatitude unstable air-sea interaction. It is found that the midlatitude air-sea coupling through atmospheric TEDF and diabatic heating with more realistic vertical profile destabilizes the oceanic Rossby wave mode over the entire range of zonal wavelengths, and the most unstable mode exhibits an equivalent barotropic structure with geopotential lows (highs) over cold (warm) water. The spatial configuration structure and period of the most unstable coupled mode are more consistent with the observation than those from the previous model. Although either TEDF or diabatic heating alone can lead to unstable air-sea interaction, the former is dominant to the instability. TEDF in both higher and lower layers can cause unstable coupled mode individually, while the lower-layer forcing stimulates instability more effectively. Surface diabatic heating always destabilizes the coupled mode, while the mid-level heating always decays the coupled mode. Moreover, the influences of oceanic adjustment processes, air-sea coupling strength and background zonal wind on the unstable coupled mode are also discussed. The results of this study further prove the TEDF-driven positive feedback mechanism in midlatitude air-sea interaction proposed by recent observational and numerical experiment studies.