I don't have access to an IIS 7 box to check, for II6 on Windows 2003:

Update: If you're logged in to the server, open IIS, expand the 'Web Sites' folder, right click a site, then select 'Properties' from the drop down menu. 'Enable logging' should be checked, the 'Properties' button shows other options including providing a specific path. Note this is a per 'site' setting.