Resolution:
There are 3 ways to set a non-default location for the process engine log file:

1)
--Modify the bwengine.xml under:
&ltbw_home>/&ltversion>/lib/com/tibco/deployment,
adding the
Engine.Log.Dir property.
--Rebuild the .ear file in Designer.  The new properties will be included in the .ear file.  
--After the .ear file is uploaded and deployed in Admin, all engine properties will be displayed under:
Admin GUI -> application -> Edit Service Configuration Panel -> Advanced Tab -> Adapter SDK Properties

2)  
--In Designer, use the advanced Global Variable Editor and click on "Service" for "DirTrace"
--Build the EAR file making sure that "Include all service level global variables" is checked
--Load the EAR file in Administrator
--Select the PAR file for the process engine under "Configuration Builder" on Administrator GUI
--Go to the Advanced Tab and enter the new value for DirTrace
--Deploy

3)
Modify the variable:
Engine.Log.Dir
in the deployed application .Tra file