I turned off anti-virus again as well as file indexing and google 
desktop too and still got the errors when I disabled the locks around 
the os.system() calls.

Vinay - when the locks aren't around the os.system() calls, do you get 
the rotating log errors?

I'm still confused at how the os.system calls could be affecting the 
logging at all.  The os.system calls aren't touching the log files.  
Why would it cause them to fail when the os.system calls fail?  It 
seems that when the os.system calls succeed (because of the locks) then 
the logging succeeds but when the os.system calls fail (because the 
locks are disabled), then logging fails.  If, as you suggest, this is a 
race condition that is being exposed by the os.system calls failing 
because they don't have locks around them, then that would be the 
perfect situation (if you can reproduce it) to debug it.