Services can't interact with the desktop Pommy as of Windows Vista. No UI. In XP Services could ONLY interact with the first logged in user since they just happened to share a session. In Vista services get their own session, and thus can't interact with other user sessions any more than they could in XP (which have their own desktops).
Plus services need to use specific APIs, they can't be normal programs. Even if you use an app which is meant to run any program as a service (by launching the program from a service) you still don't get any UI.
Brian the only solutions are a) hope Sansa updates their tool to be Vista-compatible (they've had almost 3 years now, good luck) b) find a different program that is Vista-compatible that can upload videos on his eyePod clone or whatever a fuze is (good luck with that, vendor lock in and all is fun) c) make his account administrator (yeah you don't wanna do this) or d) have him call you when he needs to run it so you can input the password. It's probably also best to supervise until he closes it... it's easy to launch other apps elevated, even by accident, from an elevated process, giving him full Administrative access to the system. Which you said you didn't want.
I don't suppose this fuze thing can appear as a hard drive in My Computer, because that would be too easy and would make it difficult for them to force you to use their horrible program.
Tibby: Disabling UAC won't help here. Doing that would PREVENT the limited user account from running the program at all. It's only really useful for Administrator accounts since you already have the access rights and UAC just restricts you to simulate a Limited User environment, so you feel safer and so devs are encouraged to make apps that run as Limited User (it's not meant to protect from malware at all fyi, no matter how shield-ish the icon looks).
Secpol is probably part of the finer grained security and permissions management tools that are only included with the "expensive" Windows editions since usually businesses need them.
[Edit: Actually there's also an e) Figure out the permissions that the sansa tool requires and add them to his user account. However this assumes several things: 1) the permissions are accessible in the "home" edition. If you can't set permissions on files from the UI, rebooting into Safe Mode Administrator account may show the UI, and there are also free MS/other command line tools for all editions of Vista to maniupualte permissions. 2) the app does not auto-elevate, but crashes when you don't elevate it (ie it would be possible to run it not-elevated). Even if it does you may be able to force it not to elevate by hacking the manifest file in the EXE using ResHacker.
Anyways you'd ideally use Process Monitor to keep an eye on what the tool does up until it crashes or fails or whatever, then examine the log to see what it tried to access that failed, and then add the appropriate permissions to allow access.
One thing that might be doing it is that Program Files is not writable to Limited Users and apps which write to their own app folder (discouraged by MS, thus the change) will fail to work. Changing the permissions of the app folder to allow writes by Users group would fix this.]
