Inno Setup: Set default value for desktop icon-check box to true

No, there's no way to do that while still keeping the functionality your customers are 'implicitly' asking for. The only 'wrapping' in MSI you can do is to extract it on installation and start your InnoSetup installer from the temporary location where you extracted to. MSI is a fundamentally different way of working: InnoSetup (& NSIS & most other installers) take a code-centric approach: you 'program' the 'steps' to install your data. MSI is a database and takes a 'data-centric' approach: you indicate what files should be installed and the MSI 'runtime' does the rest. This gives you versioning and exact control of what goes where.

In short, to give your customers what they want (i.e., the ease of deployment that MSI brings with AD), you'll need 'proper' MSI's. Good luck with that, it's a major pain IMHO. But it does give good results once you master MSI & WiX.

You don't need installutil.exe and probably you don't even have rights to redistribute it.

Here is the way I'm doing it in my application:

using System;
using System.Collections.Generic;
using System.Configuration.Install; 
using System.IO;
using System.Linq;
using System.Reflection; 
using System.ServiceProcess;
using System.Text;

static void Main(string[] args)
{
    if (System.Environment.UserInteractive)
    {
        string parameter = string.Concat(args);
        switch (parameter)
        {
            case "--install":
                ManagedInstallerClass.InstallHelper(new string[] { Assembly.GetExecutingAssembly().Location });
                break;
            case "--uninstall":
                ManagedInstallerClass.InstallHelper(new string[] { "/u", Assembly.GetExecutingAssembly().Location });
                break;
        }
    }
    else
    {
        ServiceBase.Run(new WindowsService());
    }
}

Basically you can have your service to install/uninstall on its own by using ManagedInstallerClass as shown in my example.

Then it's just matter of adding into your InnoSetup script something like this:

[Run]
Filename: "{app}\MYSERVICE.EXE"; Parameters: "--install"

[UninstallRun]
Filename: "{app}\MYSERVICE.EXE"; Parameters: "--uninstall"