Oh well here is another one.
THE PROBLEM:
You are getting a repeating Event Log error 5400 stating the following:
Tracing Service failed to create the trace log file directory 'd:\Program Files\Common Files\Microsoft Shared\Web Server Extensions\12\LOGS\'. Error 3: The system cannot find the path specified.
THE CAUSE:
The problem is related to the permisisons on the tracing and diagnostic log directory for SharePoint services. This is configured in Central Administration under the Operations tab.
In our case what precipitated the problem was that we moved our diagnostic logs from the C:\ drive to the D:\ drive by just switching the drive letter in the path in Diagnostic Log settings window in Central Administration.
While the new path is taken just fine by SharePoint it does not inspect the path for the correct permissions and or allocate the correct set of permissions.
THE SOLUTION:
1. Modify the permissions on the following folders giving Local Service the List Folder Contents rights:
D:\Program Files
D:\Program Files\Common Files
D:\Program Files\Common Files\Microsoft Shared
D:\Program Files\Common Files\Microsoft Shared\Web Server Extensions
D:\Program Files\Common Files\Microsoft Shared\Web Server Extensions\12
2. Modify the permissions on D:\Program Files\Common Files\Microsoft Shared\Web Server Extensions\12\Logs giving “Local Service” Modify rights.