A UNC path may be valid BUT is needs to be valid for the account trying to access it, also a UNC path may become unavailable for a short period which causes the FileSystemWatcher to report an invalid path.
So with this in mind;
1. the account you test the UNC path with, is this the same as used by the service? If not it must be otherwise the account you are testing with may not have the same permissions to access network resources as the account the service runs under.
2. When a UNC path becomes unavailable for wahtever reason you need to catch the error and retry at a later date, an article that can show how to do this is FileSystemWatcher - Pure Chaos (Part 1 of 2)
Remember when using a UNC path it may or may not be valid and you really need to know why this may be, either due to account permissions or the server going down.