DevTest VSE is not starting as a service (VirtualServiceEnvironmentService) but it runs fine as a component when started from the command line (VirtualServiceEnvironment).
VirtualServiceEnvironmentService.vmoptions file may have invalid entries.
If the vmoptions file was created for a previous release it may refer to options or files and folders that have changed.
Component : CA Service Virtualization
Recreate VirtualServiceEnvironmentService.vmoptions from scratch or copy it from VirtualServiceEnvironment.vmoptions