Your question didn't indicate the operating system.
On Windows XP, you can configure your Windows service to interact with the desktop by opening the service control panel, double-clicking your service, selecting the Log On tab, configuring the service to run as local system, and checking the checkbox. It's pretty straightforward. You might try testing with something like Notepad.exe just to see if you can get it working.
On Vista (and presumably Windows 7), however, you may be out of luck. I have read that the ability for Windows services to interact with the desktop has been removed in Vista. I forget what the terminology is, but basically services will run in "shell 0," whereas users will occupy "shell 1". User applications will be able to communicate with services and vice versa using technology like WCF, but services will not be able to communicate directly with the desktop. For example, any error boxes that pop up will have to be dealt with by swapping to "shell 0." Again, this is based on something I read a few months ago, and I haven't gone looking at it again. For me, I've structured my Windows service to be configured using WCF via a front-end app.
I'm sorry I don't have a link for you, but if your service will eventually have to migrate to a newer OS (or you are already there), this is something to check on.