Here is the code to shrink a bloated log file:

SQL 2005

DBCC SHRINKFILE('<LogFileName>', 1)
BACKUP LOG <DatabaseName> WITH TRUNCATE_ONLY
DBCC SHRINKFILE('<LogFileName>', 1)

SQL 2008

USE <databaseName>
GO

ALTER DATABASE <databaseName> Set Recovery Simple
GO

ALTER DATABASE <databaseName> Set Recovery Full
GO

DBCC SHRINKFILE ('<LogFileName>', 1)
GO

FINDING NAME OF SQL LOG AND DATABASE FILE

To find the logfile and database names you can execute the below procedure

use <databaseName>

exec sp_helpfile