You can solve this problem by using “Shrink” command in the MS SQL Server Management Studio Express

First you need to connect to your Sharepoint 3.0 database called: \\.\pipe\mssql$microsoft##ssee\sql\query - just put this string in your “Server name” field:

\\.\pipe\mssql$microsoft##ssee\sql\query

 Create full backup of all databases before continuing!

After that we should change restore mode from “Full” (this the parameter that allows .log.ldf to grow that large as transaction logs are not purged) to “Simple”:

Expand Databases, right mouse click on Sharepoint_Config… Properties, Options, Recovery model: Simple and click OK

Shrink the database procedure:

Expand Databases, right mouse click on Sharepoint_Config… Tasks, Shrink, Files in File type select Log and click OK
Your log file will become radicaly smaller.

Be sure you backup your databases before this procedure and also on daily bases…

Good luck!

 Also check:
http://geekswithblogs.net/RogueCoder/archive/2008/06/03/122588.aspx
http://www.karaszi.com/SQLServer/info_dont_shrink.asp