Within a SharePoint farm configuration (multiple servers), the SharePoint Health Analyzer will first complain that the SPTraceV4 account should not be running as a local service. If you manually fix this by setting a domain account for the trace service (on each server) and restarting the service, sometimes you will still get the message 'Built-in accounts are used as application pool or service identities' within the Health Analyzer. To fix this, do the following:
1) Create the Trace Account (e.g. DOMAIN\svc-SP_TRC) as a managed account.
2) Start up the SharePoint 2010 Management Shell in administrator mode
3) Type the following Powershell script:
$servicename = "SPTraceV4"
$managedaccountname = "DOMAIN\svc-SP_TRC"
$farm = Get-SPFarm
$SPTimerv4 = $farm.Services | Where {$_.Name -eq $servicename}
$SPTimerV4NewAccount = Get-SPManagedAccount $managedaccountname
$SPTimerv4.ProcessIdentity.CurrentIdentityType = "SpecificUser"
$SPTimerv4.ProcessIdentity.ManagedAccount = $SPTimerV4NewAccount
$SPTimerv4.ProcessIdentity.Update()
4) Goto to each server in the farm and restart the tracing service. Then do an IISRESET /noforce on each SharePoint Server
5) Open up Central Administration, view the problem report and re-analyze the built-in accounts Health Analyzer message.
6) Close the report message and refresh the page. The error should now be gone.
7) If you have moved your logs to another (e.g. non-System) drive, on the directory where logs are to be written to, ensure that the nominated domain Trace account has full read/write permissions to it. You may have to restart the trace service and do an IISRESET again to notice that activity is now being written to the LOGS directory. Note that this approach also fixes the issue where you see lots of log file entries, all 0KB in length.