The Dynamics NAV Service Tier, also called the NAV Server or NAV Service is the application service/server in the NAV three tier architecture. Whenever a user accesses NAV using the RoleTailored clients all code is executed on the NAV server and only the results returned to the client.
The NAV server is "automatically" installed when running the main setup.exe from the product dvd and you select the Demo option or the Server option. The setup process will run you through the process of specifying the different required parameters.
But you can also install the server "manually" if you run the "Microsoft Dynamics NAV Service.msi" file in the ServiceTier folder.
Always remember to start the installation process with the "Run as Administrator" option. The installation requires this for the installation to work without problems.
If you have installed using the Setup.exe you should be good to go now. But otherwise you will need to set the parameters in the customsettings.config file.