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I had the same problem with Windows 2003 Server x64. I found a workaround however - I copied the synergy.sgc file from the current user's "My Documents" to the Default User's "My Documents" directory. Once I did this the service started up fine.
error 4 does mean the configuration couldn't be read. try running synergy.exe and click "Configure" under "Automatic Startup". turn off autostart when the computer starts then turn it back on again. then quit and try manually starting the service.