Format is not an option that I freely give.

The reason I asked about SP1 was I had the same thing happen to me, but with a different service, while I was testing SP1 (beta) on one of my test systems. For some reason, it changed the account that it used and when I swapped it out for the correct one, it fixed it.
You cannot change the behavior of WEL service, but the service that "shares" the same process, you can.
In the WEL service properties, General tab, ensure this:
C:\Windows\System32\svchost.exe -k LocalServiceNetworkRestricted
Is there.
Now, on my desktop (tweaked), Windows Event Log is sharing a process with the DHCP Client service as well as the Windows Audio Service. Ensure that those are also set to "Local Service" in the logon tab of each.
As a further step, check the following:
On my test system, untweaked (default), I have these services all sharing the same process:
DHCP Client
Security Center
TCP/IP NetBIOS Helper
Windows Audio
Windows Event Log
Ensure that all of those are also on Local Service for logon.