And if you put something like this in your /mysite/_config.php:
Debug::log_errors_to(Director::baseFolder() . '/error.log');
Should create the log file in your current site root.
Update: After looking at the Debug class I noticed that Debug::log uses "relative to __FILE__" paths which won't work with symlinks. Are you using Debug::log by any chance?
Update 2: looks like Debug::log_error_if_necessary is also creating some strange paths. WTF at the following:
$shortFile = "../" . self::$log_errors_to;
I guess this wasn't meant to be used with absolute paths. There's room for improvement here, I guess I will submit it as a patch, so that it works with symlinked installs (they already changed the Image class in that respect, so why not do the same for Debug)
Update 3: Ah. Another update..
Just had a look at the Debug class in 2.4-alpha1 and saw that the log_errors_to will be replaced with a Wrapper around Zend_Log (SS_Log). That should give much more flexibility (I love Zend_Log) and solve this issue once 2.4 is out. I guess there's no point in patching the old Debug class. I suggest you simply modify the Debug.php file to use paths that work with the symlinked install (Director::baseFolder() comes to mind, or use a defined constant)