ShopSite Reports Tab - Log File Not Found Error

[bittersweet]

I'm in the processing of setting up a new ShopSite cart on our server. I've added several products and I ran through a couple 1 cent test transactions with my credit card, which worked just fine (I showed up in ShopSite as an order and I received e-mail receipts). I then went into the Reports area of the back office and received this error message.

There are problems with the Web server log file settings as indicated below. Please make the appropriate changes to rectify the problems. If you are uncertain what these settings should be to enable access to your Web server's log files, contact your host administrator for assistance.

Now my log files are located at C:\WINDOWS\system32\Logfiles\W3SVC1 and I verified on the server that the folder is indeed there.

Server log file name: nc*.log (error: log file not Found)
Creation of istat files: Yes is selected

I'm on a windows 2003 server with IIS 6. I'm running the most recent version of ShopSite.

Any idea what I need to do?