You may have encountered a known issue with ArcIMS 4.0.1 under these very specific circumstances.
1. When you tried adding a new ImageServer service, you received an "Error Administering Service" message.
2. Your map configuration file contains a reference to an image directory.
The problem described in this article is specific to ArcIMS 4.0.1 only.
The "Error Administering Service" message can have many potential causes and in many cases indicates a problem the ArcIMS Spatial Server is having with the data being referenced in the map configuration file.