Ok so I posted how I installed my windows service yesterday only to witness my own lack of understanding drive by me waving as it drove into the distance. Thanks to some good feedback here I have now fixed my project and the windows service installs properly now. It was an easy fix because I already had an installer class in my project (http://staff.develop.com/candera/selfinstall.htm). All I had to do was delete the custom actions I had created improperly before (see my last blog post) and then create two new custom actions. One for Install using the output from my service project, and adding one argument  /install. I do the same for unistall but use the /unistall argument.

Thanks for all the feedback! It really helped me.