I run squeak successfully using srvany.exe and instsrv.exe from the 
resource kit. Instrv.exe is a command-line tool that installs any 
program executable as a service on the machine. In this case, we use 
srvany.exe as the program to install into the service control manager. 
Srvany.exe is another command-line tool that will wrap any program 
properly as a service. Srvany.exe requires you to setup some registry 
parameters that tell it what program it is running. I run squeak with 
the standard parameters (e.g. what image file) but I also include the 
"-headless" option. That's about all I do and it works every time on 
Windows XP, 2000, or 2003. I run probably 10 - 15 squeak instances 
this way.

Let me know if you need more details but all these programs are 
available on the net. Below is a sample dump of my registry keys for 
one of my Squeak instances:

[HKEY_LOCAL_MACHINE\SYSTEM\ControlSet001\Services\Squeak 3.8\Parameters] 
"AppDirectory"="d:\\squeak38" 
"Application"="squeak.exe" 
"AppParameters"="-headless Squeak3.8g-6527.image"

Hope this helps.

Regards,

John