You must do this for each character whose journal you want to save.
Open up the uo.cfg file in a text editor (Notepad will do). Above the line that looks like this
;------------------------------
add a line with the path to where you want the journal to save, like this
JournalSaveFile=c:\uolog\uolog.txt
now find the line below that says "SaveJournal=off" and change "off" to "on".
It's been a very long time since I originally did this so I don't recall if it's really necessary to "seed" the file, but it wouldn't hurt. If you specified a directory (folder) that doesn't exist for your path, create the folder now. Open up Notepad and create a blank .txt file in that folder named whatever you specified in the uo.cfg file. For example, I save mine to a folder named uolog off the root directory (c drive). So I would create a folder whose path is c:/uolog. Then I would open Notepad and create a blank file saved in that directory named uolog.txt.
Now log into the game on the character you did this for and make sure the option to Save Journal is checked/on in the game options. I don't recall where this is, but then it will also depend on which client you're using. It should show on now. Log out and check the file to see if the journal saved.
Remember, you must make the uo.cfg changes for every character whose journal you want to save. Also, the journal will keep adding to the end each time you enter and exit the game. Eventually it could become a quite large file so plan on either deleting some as it gets too large, or creating backups of olders ones you want to keep.
You might also want to check into the
UO Journal Converter which gives you the ability to convert the journal to html files and has options to color the names of your characters, your friends, your enemies, all differently and will also allow you to automatically edit out some things, such as all the "you see..." lines.