Here is the oficial article from microsoft:
http://support.microsoft.com/kb/313437
1- Start Internet Information Services (IIS) Manager.
2- Expand ServerName, and then expand Web Sites or FTP Sites. Right-click the Web site or the FTP site where you want to enable logging, and then click Properties.
3- Click the Web Site tab, or click the FTP Site tab.
4- Click to select the Enable logging check box.
5- In the Active log format box, click the format that you want to use.
6- Click Properties, and then specify the settings that you want. For example, if you use W3C Extended log file format, follow these steps:
a. If you are running IIS 6.0, click the General tab. If you are running IIS 5.0 or IIS 4.0, click the General Properties tab. Specify the schedule that you want to use to create new log files. For example, to create a new log file every day, click Daily.
b. If you want to use local time, click to select the Use local time for file naming and rollover check box.
Note Midnight local time is used for all log file formats except W3C Extended log file format. By default, W3C Extended log file format uses midnight Coordinated Universal Time (Greenwich Mean Time). To use midnight local time, click to select the Use local time for file naming and rollover check box.
c. If you are running IIS 6.0, click the Advanced tab. If you are running IIS 5.0 or IIS 4.0, click the Extended Properties tab.
d. Specify the options that you want. For example, specify the properties that are listed in the "Customize the data" section. Click OK.
e. Click OK.