When you create in Contributor Administration a new application in SQL server, You can only provide a data directory but not a log directory. Therefore the data and log files are created in the same directory. You can change this by editing the file epEAdminSQL7Resources.xml located in <installation directory>\c8\bin.

Example:
The SQL server log file directory is F:\SQL\Logs

In line 6 you find the following line for the log file location

LOG ON  ( NAME = [%1_log],  FILENAME = N'%2%1_log.ldf',  SIZE = 10MB,  FILEGROWTH = 10% )

change this into

LOG ON  ( NAME = [%1_log],  FILENAME = N'F:\SQL\Logs\%1_log.ldf',  SIZE = 10MB,  FILEGROWTH = 10% )

Save file and restart Cognos services.

Tip: you can change here also the initial size of the database and the file growth behavior

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