I wrote an article in 2007 how to setup ODBC Logging on IIS 7.0. There was a post recently in the newsgroups someone wanted to setup and couldn't get it working. My article uses sql server 2005, IIS 7.0. I was able to reproduce an issue on my test
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Read the complete post at http://blogs.iis.net/steveschofield/archive/2009/11/26/odbc-logging-iis-7-5-sql-server-2008.aspx