Lara,
I'm guessing you are getting an error because of the search cursor. I think I forgot to finish the code for the search cursor the last time I gave it to you. It should be this:
arcpy.da.SearchCursor(Catchment,["OID@","Outlet_ID"],where_clause = '{0} = {1}'.format(arcpy.AddFieldDelimiters(CHM_Input, oidField),Raster_Number)).next()[1]
I'm not sure why you are getting a "\\Service" tagged to your output name. If it was working fine for you before then I would suggest going back the way you had it before.
On another note it might be helpful for us to see an arc catalog screen shot of your workspace folder with the raster files.