First some important information:
Running Windows Server 2008
PHP Version 5.3.8
Installed in C:\Program Files (x86)\PHP\v5.3\php.ini
Navigate to the PHP folder and open the PHP.ini file. Be careful because if you screw up this file, PHP won't work anymore.
Change it to:
This may not work until you restart the php service. If you restart the IIS Admin Service, it should restart any other service that need restarted.
UPDATE: I missed a key thing. You need to add the following to the permissions of the log folder.
Create Files/ write data Allow
Create Folders / append data Allow