Unknown error When Starting java.exe from an ASP.NET Application - asp.net

Question

On these lines of code:
// Run compiler
Process p = System.Diagnostics.Process.Start("java.exe", ex);
p.WaitForExit();
We get this error:
Server Error in '/' Application.
Unknown error (0xfffffffe)
Description: An unhandled exception occurred during the execution of the current web request. Please review the stack trace for more information about the error and where it originated in the code.
Exception Details: System.ComponentModel.Win32Exception: Unknown error (0xfffffffe)
Source Error:
An unhandled exception was generated during the execution of the current web request. Information regarding the origin and location of the exception can be identified using the exception stack trace below.
Stack Trace:
[Win32Exception (0x80004005): Unknown error (0xfffffffe)]
System.Diagnostics.Process.StartWithShellExecuteEx(ProcessStartInfo startInfo) +912
System.Diagnostics.Process.Start() +136
System.Diagnostics.Process.Start(ProcessStartInfo startInfo) +49
Arcade.UploadFunctions.minifyC2Runtime(Int32 GameID) +333
Arcade.GameFunctions.createGame(Int32 CatID, String Name, String Description, String Instructions, Int32 UserId, Int32 Width, Int32 Height, Int32 ParentGameID) +1338
ArcadeSubmit.submitGame(Object sender, EventArgs e) +1329
System.Web.UI.WebControls.Button.OnClick(EventArgs e) +118
System.Web.UI.WebControls.Button.RaisePostBackEvent(String eventArgument) +112
System.Web.UI.WebControls.Button.System.Web.UI.IPostBackEventHandler.RaisePostBackEvent(String eventArgument) +10
System.Web.UI.Page.RaisePostBackEvent(IPostBackEventHandler sourceControl, String eventArgument) +13
System.Web.UI.Page.RaisePostBackEvent(NameValueCollection postData) +36
System.Web.UI.Page.ProcessRequestMain(Boolean includeStagesBeforeAsyncPoint, Boolean includeStagesAfterAsyncPoint) +5563
Version Information: Microsoft .NET Framework Version:4.0.30319; ASP.NET Version:4.0.30319.272
As noted in my other question it would appear this is a permissions error. However, this error disappears if I recycle my app pool. It then starts throwing this error again within a couple of hours or so.
The apppool in question is running with LocalService identity. Anyone know what would be causing this to break?
Edit: More details error from event viewer
Event code: 3005
Event message: An unhandled exception has occurred.
Event time: 2/29/2012 8:15:12 AM
Event time (UTC): 2/29/2012 8:15:12 AM
Event ID: 6b5770960c4f41b1a9ba10045b7b50d4
Event sequence: 131746
Event occurrence: 480
Event detail code: 0
Application information:
Application domain: /LM/W3SVC/1/ROOT-26-129749512365140162
Trust level: Full
Application Virtual Path: /
Application Path: C:\inetpub\wwwroot\Scirra\
Machine name: WIN-MT04GJ7U5CB
Process information:
Process ID: 8276
Process name: w3wp.exe
Account name: NT AUTHORITY\LOCAL SERVICE
Exception information:
Exception type: Win32Exception
Exception message: Unknown error (0xfffffffe)
at System.Diagnostics.Process.StartWithShellExecuteEx(ProcessStartInfo startInfo)
at System.Diagnostics.Process.Start()
at System.Diagnostics.Process.Start(ProcessStartInfo startInfo)
at Arcade.UploadFunctions.minifyC2Runtime(Int32 GameID)
at Arcade.GameFunctions.createGame(Int32 CatID, String Name, String Description, String Instructions, Int32 UserId, Int32 Width, Int32 Height, Int32 ParentGameID)
at ArcadeSubmit.submitGame(Object sender, EventArgs e)
at System.Web.UI.WebControls.Button.OnClick(EventArgs e)
at System.Web.UI.WebControls.Button.RaisePostBackEvent(String eventArgument)
at System.Web.UI.WebControls.Button.System.Web.UI.IPostBackEventHandler.RaisePostBackEvent(String eventArgument)
at System.Web.UI.Page.RaisePostBackEvent(IPostBackEventHandler sourceControl, String eventArgument)
at System.Web.UI.Page.RaisePostBackEvent(NameValueCollection postData)
at System.Web.UI.Page.ProcessRequestMain(Boolean includeStagesBeforeAsyncPoint, Boolean includeStagesAfterAsyncPoint)
Request information:
Request URL: http://www.scirra.com/ArcadeSubmit.aspx
Request path: /ArcadeSubmit.aspx
User host address: [censored]
User:
Is authenticated: False
Authentication Type:
Thread account name: NT AUTHORITY\LOCAL SERVICE
Thread information:
Thread ID: 5
Thread account name: NT AUTHORITY\LOCAL SERVICE
Is impersonating: False
Stack trace: at System.Diagnostics.Process.StartWithShellExecuteEx(ProcessStartInfo startInfo)
at System.Diagnostics.Process.Start()
at System.Diagnostics.Process.Start(ProcessStartInfo startInfo)
at Arcade.UploadFunctions.minifyC2Runtime(Int32 GameID)
at Arcade.GameFunctions.createGame(Int32 CatID, String Name, String Description, String Instructions, Int32 UserId, Int32 Width, Int32 Height, Int32 ParentGameID)
at ArcadeSubmit.submitGame(Object sender, EventArgs e)
at System.Web.UI.WebControls.Button.OnClick(EventArgs e)
at System.Web.UI.WebControls.Button.RaisePostBackEvent(String eventArgument)
at System.Web.UI.WebControls.Button.System.Web.UI.IPostBackEventHandler.RaisePostBackEvent(String eventArgument)
at System.Web.UI.Page.RaisePostBackEvent(IPostBackEventHandler sourceControl, String eventArgument)
at System.Web.UI.Page.RaisePostBackEvent(NameValueCollection postData)
at System.Web.UI.Page.ProcessRequestMain(Boolean includeStagesBeforeAsyncPoint, Boolean includeStagesAfterAsyncPoint)
Custom event details: