Error during setup of Log Reader: "Logon failure: the user has not been granted the requested log (4235952)

Steps to duplicate: during initial set up of Log Reader:

1. Configure Server Components.
2.  Error displays:   Logon failure: the user has not been granted the requested logon type at this computer.
3. User is an administrative domain user who is assigned as a local administrator on the server.

The logged in user must have the privilege "Log on as a batch job".

Go to Control Panel | Local Security Settings | Local Policies | User Rights Assigment | Log on as a batch job | properties and  add members.