I have spent a couple of hours looking for the magic configuration to get Tomcat 7 running as a service on Windows Server 2008... no luck.
I do have a solution though.
My install of Tomcat 7 works just fine if I just jump into a console window and run...
C:\apache-tomcat-7.0.26\bin\start.bat
At this point another console window pops up and tails the logs (tail meaning show the server logs as they happen).
SOLUTION
Run the start.bat file as a Scheduled Task.
Start Menu > Accessories > System Tools > Task Scheduler
In the Actions Window: Create Basic Task...
Name the task something like "Start Tomcat 7" or something that makes sense a year from now.
Click Next >
Trigger should be set to "When the computer starts"
Click Next >
Action should be set to "Start a program"
Click Next >
Program/script: should be set to the location of the startup.bat file.
Click Next >
Click Finish
IF YOUR SERVER IS NOT BEING USED: Reboot your server to test this functionality