This is the same error one gets when one tries to use SRVANY to launch it. There's no need to go digging for the error log, because there's little you can do about it. The software expects to have a screen and a taskbar to interact with, and it just ain't there unless you're logged in.

To get it to work as a service in NT, you can either: (a) use the aforementioned FireDaemon (which I've never tried myself), (b) use the Java version of the server instead of the Rio version, or (c) wait for the next version which will have NT service capability built-in.