One thing can be read from what the game's getting from the script: instead of proper data in form of the agreed protocol, a warning about issue in execution of the script comes down the pipe, indeed stating that the log can't be created because of permission denied.
I've obviously overlooked something in the initialization part of the script that sets up logging, causing the comms never get back in sync of getting proper data after the warning.
You could try this as first aid:
http://modulaatio.com/runningwithrifles/log.zip. Unzip that in your RWR installation folder\media\packages\vanilla\scripts\internal so that it overwrites log.php. Make a backup of the original file.
Other alternative could be to create metagame.log manually in RWR installation folder\media\packages\vanilla\scripts\, contents don't matter.
Why it isn't able to create metagame.log in there even if admin account is used could be because of UAC, user access control in Windows 7. It's commonly known Windows 7 prohibits applications from writing in Program Files while running by default, so my decision of having metagame.log there is obviously a poor choice (it even says in log.php: // TODO: figure out path to appdata?). Anyway, the log was only supposed to be used for debugging and development for myself mostly, and now it seems it's the one causing major issues for players.