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Can a trademark registered by one party be registered as a service mark by another party?

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Yes, it happens frequently. A trademark typically only has significance within a given market or for particular goods and services, so it is not unusual to have identical (or very similar) trademarks in use by different parties for different products or services.

The gray area is where goods and service could overlap, such as software consulting services with the same brand as another company selling disk drive hardware kits, or an automated household weather station with the same brand name as an outdoor clothing company. Possible confusion. Possible problems.

There are some easier cases, as where a brand is so famous (or unique) that a consumer might guess that any new product with that brand came from the same source as earlier ones. McNuggets, McDonalds, McSleep, McSofa-cleaner?

On the other hand, it is usually quite difficult to obtain registration for a similar (or same) mark within the same "classification" of goods or services as an existing registration. In some countries the registration in one class pre-empts registration of any similar mark within the entire class. For example, "SUNNYTIME" brand hats might prevent registration of "SUNSHINE" belts or shoes, but not "SON-SHINE" shoe polish.

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