I'm writing a small server-like program in C for Windows (using MinGW/GCC, testing on Windows 7) which is eventually supposed to run as a service with the LocalSystem account. I am creating a socket, and using Windows Sockets bind(), listen() and accept() to listen for incoming connections. If I run the application from the command line (i.e. not as a service, but as a normal user), I have no problems connecting to it from external IPs. However, if I run the program as a service with the LocalSystem account, I can only connect to the service from my own PC, either with 127.0.0.1 or my local address, 192.168.1.80 (I'm behind a router in a small local network). Neither external IPs nor other PCs in the same local network, using my local address, can connect now, even though there were no problems without running as a service.

Now, I've heard that networking is handled differently or even not accessible (?) when running as LocalSystem or LocalService or that services cannot access both the desktop and the network (note: my service is not interactive) at the same time due to security considerations. Essentially, I need to find out what's going wrong/how to listen for connections in a service. Is running as NetworkService the same as running as LocalSystem, but with network access? Surely there must be servers that can run as background services, so how do they do it?