2. Under Services, click the database symbol next to the service's name.
A 'Service Workspaces' window appears. One of the tabs will be activated: Referenced, Replaced or Copied.
If the Copied tab is activated then the data was copied to the Server.
Solution or Workaround
Whether using a multi-user database or a simple file geodatabase, it is necessary to grant the ArcGIS Server Account permission to the location of the data prior to following the workflow below. See the web help topic Make your data accessible to ArcGIS Server for further information.
In ArcGIS Server Manager, navigate to Site > GIS Server > Data Store.
Depending on the location of the data, either click 'Register Database' or 'Register Folder'. Enter the required parameters and click 'Create'. See About registering your data with ArcGIS Server for further information regarding data registration.
Republish the map service and ensure that the 'Overwrite an existing service' option is selected.
Note: Prior to publishing, notice that the warning is no longer returned that the data will be copied to the server.
If the database was registered with ArcGIS Server, notice that edits made in the database are reflected at the service level almost immediately, without the need to restart or overwrite the service.
If a folder was registered with ArcGIS Server, notice that after restarting the map service, changes made to the data are reflected at the service level.