Thanks for the links, Chris. I've often wondered about the specific effects of privileges like "BypassTraverseChecking" but never bothered to look them up.
I was having interesting problems getting a service to run and discovered that it didn't have access to it's files after the initial installation had been done by the administrator. I was thinking it needed something in addition to Logon As A Service until I found the file issue.
1) Disabled simple file sharing.
2) Temporarily made my service account an administrator.
3) Used the service account to take ownership of the files.
4) Remove service account from the administrators group.
5) Reboot.
During Take Ownership, it was necessary to disable inheritance of permissions from the parent directories and apply permissions recursively down the tree.
Wasn't able to find a "give ownership" option to avoid making the service account an administrator temporarily, though.
Anyway, thought I'd post this in case anyone else was going down the same road I was looking for security policy issues when it was really just filesystem rights.