You need to do exactly what the message tells you. You are trying to run interactively the application designed to run hosted by the system service host only. You really need to install it and run using Services applet; use "Services.msc".
If you want to install with InstallUtil.exe: it works in conjunction with classes in the
namespace which you will need to implement.
You will need to provide implementation of
These are just links to the API you will need to get into it. You will need to learn these techniques thoroughly as they are not very simple and somewhat counter-intuitive. MSDN is your friend.