Just got off this case on an idle Saturday :) ....let me share it .
SQL Server 2008 on windows server 2008 .........I just hate this combination ...sorry but i really do ...
Actually , i hate windows server 2008 because of its too many security restrictions ..
anyway lets come straigh to the topic .
The error is :This Process does not possess the SeSecurity privilege' privilege which is required for this operation
This is Manage Auditing and Security Log right which can be seen in the local security settings (start >> run >> secpol.msc >> local policies >> User rights assignments). for more information see : http://msdn.microsoft.com/en-us/library/ms813959.aspx and http://msdn.microsoft.com/en-us/library/bb530716(VS.85).aspx.
Access to the security event log is governed by SeSecurityPrivilege.Holders of the privilege have Read, Clear, and Backup permission. Holders of SeAuditPrivilege can write to the log via internal LSA APIs only.LocalSystem can write to the security event log via the ReportEvent API due to permission granted via the log ACL.
By default, these are the privilege assignments:
SeSecurityPrivilege Administrators, LocalSystem
So , you need to add your domain account or the domain group to which you belong in to this policy ......and yes you need to reboot the server.
After reboot you will see SWEET Success...
Hope this helps ..