We used to go to LOGS folder under (12 hive for MOSS 2007) and check logs. Instead of using a text editor like NotePad, “ULSViewer” tool which is good at parsing the ULS logs (Unified Logging System). This tool provides real-time viewing, smart highlighting etc.
It is an unsupported tool from Microsoft and can be downloaded from here. This tool works with MOSS 2007 as well as SharePoint 2010.