Cannot Write Logfile Error 1059 : Circular Service Dependency

I have a problem that looks like it has not been discussed before in
these groups.

I have a simple SQLAgent job that runs sp_who (could be anything, but
let's just say sp_who for this example). I have set the jobstep to
write to an output file "T:out.txt". If the job is owned by an
admin, it runs fine and writes the output file. If it is owned by a
non-admin user, it gets the following error msg:

Warning: cannot write logfile t:out.txt. Error 1059 : Circular
service dependency was specified. The step failed.

I know about setting up the SQLAgent CMDExec proxy account, and have
done that. In fact, both SQLAgent and the SQLAgent cmdexec proxy use
the same domain account, which is in the administrator group of the
local server. So, I know that security is not the issue.

When a simple job runs and writes to an output file, what service or
service group could it be trying to start or modify? I looked through
the list of Services, and could not find any circular dependencies.
Is there a utility to detect this? Why would running under one
context (as an admin) be ok while the other context (non-admin on SQL,
but using the same admin domain service account) fails?

Thanks in advance for any info you might have.