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Hi I have a Windows Server 2003 R2 SP2 running and I need to have a WDS with mixed mode so I can deploy Windows 7 & Windows XP images. I went to setup the first image and after the wizard was done copying the correct files I got:

Single Instance Storage Groveler:
Service did not start 

(or something like that).

I checked event viewer and got this:

Event Type: Error
Event Source:   Service Control Manager
Event Category: None
Event ID:   7023
Date:       3/26/2012
Time:       7:03:21 PM
User:       N/A
Computer:   SERVER2
Description:
The Single Instance Storage Groveler service terminated with the following error:           
The service has not been started. 

This server is needed very soon because we just got a shipment of several Windows XP capable laptops and need to deploy Windows XP over PXE and this is keeping us from proceeding. Any help is great!!!

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Do you have this hotfix installed? support.microsoft.com/kb/939383 –  WinOutreach4 Mar 27 '12 at 16:49

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