I'm no expert at these kinds of things, but I've been trying to figure out how to install Photoshop CS2 without Adobe LM Service (adobelmservice.exe) as it's been causing a few conflicts, otherwise it wouldn't be such a big issue.

I've tried removing any reference to it from the .msi file, but when I run Photoshop it now says "An error has been detected with a required application library and the product cannot continue". So, I assume there's some sort of check in the Photoshop executable which looks for and starts Adobe LM Service.

What I'm asking is if it's possible not to install it (modifying the .msi) and if it's possible not to look for it (modifying the .exe) when Photoshop starts. If so, how?

That's the license management service and it's required to run any of the newer Adobe products. I would suggest giving Adobe a call if there's a problem with it.