Excel 2007 Automation in Windows 2008 Service may encounter the following problem - 

Microsoft Office Excel cannot access the file.
There are several possible reasons:

• The file name or path does not exist.
• The file is being used by another program.
• The workbook you are trying to save has the same name as a currently open workbook.

The windows service, if running under the systemprofile, needs the Desktop folder. This folder was automatically created on XP and older Windows Server versions, but not for Vista and Windows 2008 Server. 

For Windows 2008 Server x64, create the following folder

  C:\Windows\SysWOW64\config\systemprofile\Desktop

For Windows 2008 Server x86, create the following folder

  C:\Windows\System32\config\systemprofile\Desktop