The following error message appears in the log file:
Cannot initialize target device: T:\Data (The system cannot find the path specified)
When running as a Service, be sure you are using a UNC path (\\Server\Path\To\Folder) instead of a mapped drive when specifying the target. Changing your target path to use the UNC path of the target location will resolve the issue. You may also want to try using the server's IP address.
If the issue still persist, make sure your PeerSync Service is running under an Administrator account with enough rights to your source and target folders.