Hi Bram,
In NT7, Excel is used to create excel documents. So the Excel program is being called from your service. My guess is that it's not set up right to do that.
In NT8 (or more specifically xFiles 2.5) you can also create Excel (xml) files using xFiles. That might be a better approach in the long run, although it might depend on the type of file you are trying to create. (Also that part of xFiles is not documented yet.)
In the short term I think as Kevin suggests, it's some sort of permissions issue though that is preventing the service from either running, or communicating with, the Excel file. (Obviously the files being created _must_ be on the C drive, there's no network shared-drive access for the service user.)
cheers
Bruce