If you use the browse button in watchdog to set the folder to save the logs to, you are unable to click 'save' as you get a warning about invalid characters in the filename.

This is because the filename has <date> and <time> as placeholders, but you cannot have < or > in a filename.

http://forum.team-mediaportal.com/mediaportal-releases-315/watchdog-problems-85901/

http://forum.team-mediaportal.com/bugreports-74/watchdog-error-85851/