Thank you for your response. I do not have access to Win xp platform. However, I checked on my Win 7 platform
Under Programs: I have Apple Mobile Device Support
Under Services: Apple Mobile Device Service
Incidentally both have same acronym. Need to check why it is not there in your system.
My thought: Both AMDS(ervice) and iTunes, are independent as explained in the support doc.
I solved the problem I talked to a tech support guy on his day off. Friend of a friend. He said to just reload itunes over the top of the current installation. Dont worry about error messages. I did and then went to services.msc and my AMDS was listed. I stopped service then restarted. Everything works iphone connected and backed up and synced with no problem.Thanks for the other advice. It didnt make sense that an error on install would help but it did.