You do not need to change the jboss-log4j.xml file, instead simply set the jboss.server.log.dir property to the location you want. For example, start the app server like this:
run -Djboss.server.log.dir=d:/jbosslogs
Then the server.log files will go into the d:/jbosslogs directory.
Of course, you can change the jboss-log4j.xml file if you want, using: <param name="File" value="d:/jbosslogs/server.log"/>
If you change the jboss-log4j.xml file, the change should be automatically picked up, but I can't recall the time delay on that, I think it is an hour.