If the Application Event Log is checked on the machine being backed-up, no VSS events are present (or there may be VSS errors if the logs are partially truncated.) However, since the quiesced snapshot is being taken, the problem must reside in the freeze.bat file or the vzshadow.exe setup itself.
1) Check the placement of the vzshadow.exe file and redeploy if necessary (be sure to also deploy the companion .dll files needed as per the deployment documentation if deploying manually, or redeploy using the "Configure VSS Options" tool in vRanger.)
2) Once verified, make sure there are no alternate VSS providers (from a cmd prompt on the machine being backed-up, perform a "vssadmin list providers" command. The Microsoft VSS provider should be the ONLY provider present. If there are additional third-party VSS providers listed, uninstall them (usually this involves uninstalling third-party backup agent software.)
3) Once verified, try the backup again and check to see if the logs are truncated. If they still are not truncating properly, the problem may have to do with the freeze.bat file's syntax. At the beginning of the freeze.bat file, the script invokes a ""%1" variable. Occasionally, this variable may not be being passed to the script correctly (for unknown reasons). Simply either delete the line invoking the "%1" variable, or "REM" it out in the script. Once done, re-run the backup, and the logs should truncate properly.