In case someone comes across this later... I had this problem after renaming my user profile (BTW: this is an ugly change).
The log file paths are hardcoded with your user profile name and need to be changed,
Ex: In the registry,
HKEY_CURRENT_USER\Software\Microsoft\Office\12.0\Outlook\Journal
The
Item Log File and
Outlook Item Log File data values had to be changed.
Review all the entries in outlook for journaling. That seemed to be the ticket for me. Creating a new Outlook profile (as some others suggested) DID NOT work for me before figuring this out.