I have an update from Microsoft! But, you're not going to like it....
They told me to try that Group Policy thing:
"Can you please check with the Group Policy for the long path enabled, which is present over
System Configuration>Administration Template>System>File System then please select enable longs path to open it."
But, the good news, they also said: "We have checked the same at our end and it's having the same scenario."
So, it's possible that they've reproduced the issue. I've asked for clarification, and pointed out that the group policy thing didn't work.
It's unfortunate that the VM I ran their logging stuff on used the registry setting trick to enable long path support. Turns out that if you go with the group policy trick then that'll also set the registry key, but not vice versa.
Maybe they'll get back to me in another 6 weeks with a new update. Wow, it's been 6 weeks!