I have an .exe I want to start when the Win2k3 server boots. Does .exe needs to be setup as a custom service. If so, what is the process to setup the custom service?
I assume you don't really mean at boot time (you would have to write a driver service for that) but rather at user mode system start up.
If your process is uncomplicated you could just set it up as a scheduled task - with the trigger set to system start. If it needs to interact with the system more, i.e. needs to be paused, needs to be shutdown, warned of system events such as power events or shutdown, etc. then you should probably look to convert it to a Win32 service.
If you do need to convert to a service then start reading here and then continue with something like Richter's or Miller's books until you really understand what you are doing. Then write your service application.
XYNTservice a simple service that can start pretty much any program as a service.