Why not just create a setup project? It's really easy.
- Add a service installer to the service (you do it on the seemingly useless service "design" surface)
- Create a setup project and add the Service output to the setup app folder
- Most importantly add the Service project output to all the custom actions
Voila, and you're done.
See here for more:
http://www.codeproject.com/KB/dotnet/simplewindowsservice.aspx
There is also a way to prompt the user for credentials (or supply your own).