Running Console application from Windows Service on Win2k03

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I am attempting to launch a console application from a service under a
different set of credentials running on Windows Server 2003.

I am getting an error "0xC06D007E: Module not found." from the called
executable.

In event viewer I am seeing a two entries of below separated by 2 seconds:
Event Type: Failure Audit
Event Source: Security
Event Category: Privilege Use
Event ID: 577
Date: 4/23/2007
Time: 2:50:55 PM
User: LINWAD1X\nodeuser
Computer: LINWAD1X
Description:
Privileged Service Called:
Server: NT Local Security Authority / Authentication Service
Service: LsaRegisterLogonProcess()
Primary User Name: LINWAD1X$
Primary Domain: HEWITT-NA
Primary Logon ID: (0x0,0x3E7)
Client User Name: nodeuser
Client Domain: LINWAD1X
Client Logon ID: (0x0,0x869B0FF)
Privileges: SeTcbPrivilege

- Need to run service with greater privileges and console app with minimal
- VB6 console application seems to work fine
- VB.Net and C# applications both fail even if they do absolutely nothing.
(empty Main)
- Exception occurs during the startup of .Net app before any code gets
control. Thus cannot debug.
- Seems to work fine on Windows XP (There are lots of other differences
though)
- Not using Process.Start because it seems to be tied to the desktop found
some other code that does impersonation and calls 'CreateProcessAsUserW'.
- The program runs fine if "Run As..." from Explorer.

Thanks in advance
Steve