Services are a little bit different from regular executables. In order to
run a service, it first need to be registered within the system, as it will
be started not by launching the .exe file, but by means of Service Control
Manager - a part of Windows managing all services. There's a kind of
protocol (namely, a sequence of SCM calls to your service) being executed
when a service starts.
To register the service with SCM, you need to add an installer class for the
service. To the best of my knowledge, there is a prepackaged installer class
in the framework designed just to register services within the system (and
this is documented in MSDN). This installer class will be invoked by the
installutil.exe utility to perform the registration. Now, that the service
is known to the Service Control Manager, it can be started by the ways
described in the error message you are getting.