Please re-read what the message said: it hasn't said it cannot create the log file, it said it created in the DEFAULT location in %APPDATA%\Virtuali, because it couldn't created in the location you specified in the COUATL_MSFS.INI file.
So, your log should be there and, if you fix the COUATL_MSFS.INI to have the correct path, that is not setting *any* path in the logFile line, like this:
logFile=Couatl.INI
it will use the default directory. Not that this would change anything, since it's already using the default directory (as the message says), but at least you won't see the message anymore.