To make it clearer: I have written the w32 System Service, using the wizard in delphi7. Now I want to install the service in windows 7 and this doesnt work :-(

what error does it produce?

try to add Windows Vista/7 manifest and check storage rules as described here:

http://delphimax.wordpress.com/2010/01/21/delphi-7-on-windows-7/

Windows 7 removed the 16bit execution engine for the sake of efficiency. That made a lot of optimizations possible throughout the entire system, and is recognize as the main reason why 7 is faster than Vista.

Note that the x64 version of Vista and Seven have this also, which is why I never experienced with my Vista x64 any of the performance problems everybody complained about. But, it is true, I experienced quite a few problems with 16 bits applications - and among them, the worst of all, the INSTALLERS !

InstallShield is running a 16 bit application at some point, and this is the core of the problem.
I have installed virtual machines (Virtual PC at first, then the more advanced VMWare Workstation) with XP 32 bits on it, and I can install and execute anything within these. I even managed to copy back the installed files in my Vista 64 along with the registry keys, and most of the time that made the trick and I then could use the applications within Vista x64. That is most probably the same with Seven.
All the more because Seven has improved built-in virtualization capabilities, and that is the core of the new MS strategy : no 16 bit support natively to allow the widest range of users to get the most of their system, and for professionals mostly that still need 16 bit applications, use of VM is the way.
For the gamers that want to play very old games, use of DosBox is a must (that is a specialized VM in essence). DosBox can even be used for professionals that need to run Dos only applications.

Here is a link with a discussion about all these issues and some solutions, you might get there more ideas for your problem
http://social.answers.microsoft.com/Forums/en-US/w7programs/thread/64b42c08-dd90-424f-8dfc-adf8fc474351

If you are talking about the command line option to install your service e.i. "SrvcApp /Install" then the following may apply to you. Starting with Windows Vista "Interactive" services are no longer supported. Check the properties of your service and be sure that Interactive is set to False and recompile. I your service have no need to interact with the desktop then it should compile and install with out issue.

Hi SteveBay,
my service is interactive with the desktop. It creates a tray icon and when you doubleclick you can change settings of the application (In windows xp)

Cheers