This is a sample of how to create a user account and then add a privilege.
It has been tested on WinXP SP2 only and only against a local machine, and then only to test the theory.
The basic concept is that there is a delphi(2007) created dll that does the grunt of the work, this is called
Note, the user will NOT be shown in the Users area of control panel, however if you check CP->Administrative Tools->Local Security Policy->Local Policies->User Rights Assignment you will see that the user has been created and added to the Log on as a service privilege.
Clearly there is still the server to install but I will leave that unless there is a need for a fuller example of that too.
I hope this helps.