I have it working

[z30303@h...]

OK, not hard but a little annoying to set this up.

Find instsrv.exe and srvany.exe (typically from Windows 2000 Resource 
Disk or NT Resource Disk). Usually, I put them into C:\WINNT\System32

at command enter 'instsrv.exe medusa "C:\WINNT\System32\srvany.exe"'

fire up a registry editor (run->regedit)

we will modify HKLM.SYSTEM.CurrentControlSet.Services.Medusa
add a new Key, called "Parameters"
under Parameters add a String called "Application", with a value 
of "C:\Python20\python.exe"
under Parameters add a String called "AppParameters", with a value
of "C:\Medusa\start_medusa.py"
under Parameters add a String called "AppDirectory", with a value
of "C:\Medusa"

all quotes are optional (as far as i know), and all paths are 
relative to your particular installation.

now you can issue "net start medusa" from command line, and it will 
run. "net stop medusa" will stop the service. You can also use the 
Management console.

Good Luck