If you check your service properties, you might find that the "path to executable" is invalid.
I almost never use the -H option, because I always explicitly set SDEHOME and PATH
before invoking 'sdeservice':
set SDEHOME=D:\ESRI\arc100sql32-sp0\ArcSDE\sqlexe
set PATH=%SDEHOME%\bin;%PATH%
sdeservice -o create ...
I also avoid spaces and special characters in my SDEHOME directories, even though it
shouldn't make a difference (old habits...)
- V