Service installed using instsrv & srvany does not function

I have an application installed as a service on windows 2003 server sp1.  I used the instsrv & srvany from the win2003 resource kit to install the service.  I can see the application start up in the task manager, however nothing happens.  I can tell if the application is running because it opens a database connection and writes to a log file.  It does neither when started as a service.  It runs properly if I just double click the application alone.  

I work for a software company, and we use srvany to run a server application as a service for many customers.  I have it successfully running on windows 2000 servers, 1 windows 2003 server (without SP1).  I think it has to do with tighter process security with sp1.  

I installed the service while logged on to the server with remote desktop using an account with administrator rights.  The server is not a domain controller.