If /usr/local/squid26s9TP/var/logs is given a group writable permission or
if the PID file is given at /var/run which is owned by root:root then the
issue disappears.

Odd..

is there perhaps a selinux policy or similar playing ghosts with you?

SElinux is disabled on my system. I have tested on both FC5 and FC6 and same problem. Let me try somemore things and will post you.

Thanks for your response

-logu

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