This is part of the session 0 isolation feature that was added to Vista. Services now run their own session with their own workstation and desktop. Much like the session that the login prompt and screen saver run in. You are taking a screenshot of that session's desktop, there's nothing in it. Getting access to the user desktop is no longer possible. It is a security feature, it prevents shatter attacks. Admittedly, I don't understand why the 'interact with desktop' checkbox wasn't removed.
You'll need to change your program to run as a "windows application", not a service. Put a shortcut in the Startup folder or use the Run registry key. Which is okay, there's nothing much worth snapping when no user is logged in.
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