Ah, right 
In 2.1 with p9 & p10 there was changes on the logwatch.
It is the line with “BATCH”… the server could not deal with it.
But i did not think thats your problem, doesn´t matter if your are admin or system.
If it works as admin and not as system sounds like permissons.
Please show me the output when you do the test with the admin account:
logtest.log:
OK
Warnung
Warnung
Kritisch
Kritisch
logwatch output:
<<<logwatch>>>
[[[c:\temp\logtest.log]]]
BATCH: 1662392860-211095051134062069186092075043192051122177080009
C Kritisch
C Kritisch