Processes are background programs that run while you're working on other tasks. They are assigned fewer resources than "foreground" programs. When you type Ctrl+Alt+Del it brings up your Task Manager and you can click the "Processes" tab to see what is running and how much memory it uses.
Services are programs, routines, or processes that perform specific system functions. They support other programs. Examples of services include Error Reporting, Help & Support, and Security Center. Some services are not necessary and can be disabled. To view services and their descriptions go to Start/Run and type in "services.msc" (without the quotes).
Here's the confusing part: services do show up in the Task Manager under the "Processes" tab. You'll see a name with "Svc" or "Srvc" in it.
So I guess that in some cases the two terms are interchangeable. The distinction comes with function—if a process supports another program it is a service.
Clear as mud.
~David
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