monitoring text file

I basically use hobbit 4.2.0 more or less as it comes out of the box and
that's been sufficient for us.  The downside is that I don't actually
know a lot about "advanced" features...

I want to monitor a plain text log file on one of our Windows servers
(already running BBWin and reporting just fine).  I've RTFM and came to
the conclusion that I need to do something like the following:

Specify the specific log file in client-local.cfg on the hobbit server:

[win32]
log:"d:\Log directory with spaces in name\log.txt":10240

Configure hobbit-clients.cfg so that the occurrence of the word "error"
causes the server's status to go red:

HOST=winservername
        LOG "d:\Log directory with spaces in name\log.txt" %error
color=red

Is this the correct way of doing this?  I guess not because it doesn't
appear to be evaluating that log file.  I've had a look at the logs but
see nothing to help.

Will appreciate advice on this.

Thanks.