Was afraid of that (which is why I said 'You
may get some more information logged').
Terminals uses some third party libs including one called TransPort2006.dll (which looks it comes from some company call FalafelSoftware, but I can't find much about them and can't find the source)
This is the library that handles the Ras Connections. If terminals gets an error or exception back from this library, then it would be logged, but obviously can't log anything if it gets no information back.
That unfortunately does not help much with your particular problem. The only thing I can suggest is test the connection outside terminals and also to check your event log.
PS, You can determine if you have changed the logging level correctly , because you should see a line logged when terminals started, something like
INFO 2011-02-08 11:45:14,034 944ms Terminals Main - Terminals 1.9a started