We have been noted about problems installing protected .NET exe service using standard Windows installer utility - Installutil.exe
http://msdn.microsoft.com/en-us/library ... S.80).aspx
The workaround for this - making a custom utility for service installation as written there:
http://stackoverflow.com/questions/1195 ... 21#1195621
The problem appears because Installutil.exe is trying to read NET assembly data from the exe file. When exe is protected, the assembly data is not accessible and Installutil.exe raises System.BadImageFormatException exception.
Apart of this scenario, custom installation utility just run the service, without reading assembly, that's working well in case the file is protected.