Can a .NET Windows service be created with ArcGIS Engine?
No. The use of any ArcGIS components within a .NET Windows service is not currently supported under any Esri product or developer license. However, ArcGIS Server provides both a framework and a licensing model to use ArcGIS components within a SOAP or REST Web service. The ArcGIS Server model can provide the desired GIS functionality to a small, focused group or a large audience. ArcGIS Server application Web services can be created with either Java or .NET and deployed on a large number of platforms.