SFTP agent on Windows 2008 server for IIS logs
In managed monitored devices check for the IP address of the IIS server. It is probably already there but as a windows device. You will have to go into that device and mark it mult-device, restart the collector service and then it should discover the IIS logs.
OK...so, you know they are being processed because they disappear from the folder or because you are seeing the the NIC message for FileReader that the messages are getting processed?
How many devices do you have under Managed Devices and what is your device limit?
Is your Windows 2008 server 64-bit or 32-bit? If it is 64-bit, what is the location of your IIS log files?
C:\Windows\system32\ is a "special case" for 32-bit processes (SFTP Agent) running on 64-bit Windows systems.
See the following article: Accessing files from System32 directory using 32 bit application on 64 bit machine http://social.msdn.microsoft.com/Forums/sl-SI/netfx64bit/thread/cfdf4474-266b-4ef5-8992-7fbdc3147521