if you google “CRM 2011 – how to enable tracing”, most of the time you will find your way to this page from microsoft
This will give you long detailed instructions on how to change the registry to turn on tracing, it’s slow, difficult and frustrating.
but my advice is to use the Crm diagnostics tool – CrmDiagTool4 instead. All you have to do is open the CrmDiagTool4 exe on the CRM Server and then it has a button saying – Click the button to Enable or Disable tracing. Although this tool is written for CRM 4 it does work in CRM 2011 and this is because the registry setting to turn tracing on/off is still the same.
Then tracing will be turned on without even having to restart anything.
This tool should be downloaded to the Server machine so you can always easily turn tracing on and off. One word of warning is tracing creates loads of files very quickly, so don’t forget you have turned it on or the server will in a month or so run out of disk space.
You can download the tool here
I hope this save you a lot of time like it did for me. The odd thing about this tool is I had never heard about it until I had escalated a problem to Microsoft and they emailed me this tool and told me to turn on tracing before recreating the problem.
It makes me wonder why the don’t include it with the SDK