A system service is a portion of the operating system which is required for certain functions to occur. For example, one system service is the Spooler service. The Spooler service allows print jobs to be accepted from an application and passed on to the printer when the printer is ready. Without the Spooler service, your computer would hold up your application while it was printing. Other services may be initiated by software you have installed, such as defragmentation or anti-virus programmes. The properties of each service can be set individually from the Services Control Panel: disabled, manual or automatic. You can also check dependencies here: to see if one service is dependent on, or a dependent of, another service. Services can also be stopped and started manually. Disabling unnecessary services, or preventing them from running automatically, frees up resources for your system.

 I run Workstation with the following services set to Automatic:

COM+ Event System
Event Log
Plug & Play 
Print Spooler (Not required if you have no printer installed!) 
Protected Storage 
RPC 
System Events Notification
Workstation 

Again I emphasise that this is purely for a single Workstation setup which requires no network connections other than TCP/IP.

If you set a service to manual that causes problems with your system, you will always have the option of restarting the service using the Recovery Console, but always keep a note of any changes you make so that you can easily reverse them. If you have problems restarting a service you can also change its properties in the registry by editing the following registry key: HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Services. The DWord Value Start for each service can be set to 2=Automatic, 3=Manual, or 4=Disabled.

It is also worth checking on the dependency of a service, i.e. if that service is required by, or dependent on, another service, by right-clicking on the service and selecting Properties, then Dependencies. Also look for services that are set to manual, but are running and consider setting these to automatic.

A detailed guide to the operation of Windows 2000 services can be found here.