Yes you’re on the right track, your hardware encoding is not starting.
ERROR> 2018-10-07T15:11:11 → StartAppWithAdminPrivilegesFromNonUISession WTSQueryUserToken failed (No logged on users) with error 1008. An attempt was made to reference a token that does not exist.
WARNING> 2018-10-07T15:11:11 MCEBuddy.AppWrapper.Handbrake → Unable to create UI Session process with Admin Privileges from NonUI Session. Is any user logged on?
WARNING> 2018-10-07T15:11:11 MCEBuddy.AppWrapper.Handbrake → Retrying process creation as a NonUI Session process with Admin privileges
WARNING> 2018-10-07T15:11:11 MCEBuddy.AppWrapper.Handbrake → Some functions like hardware encoding may not work in this mode
You’re using a Windows 7 machine if I’m correct and it requires one user logged in at all time to use hardware encoding. It could be because you’ve locked the session but usually it should work as long as a user is logged in (on the terminal or remotely).
It could also be related to the a recent service patch in Windows 7 which broke hardware encoding for another user. You can try to uninstall the patch and see if that fixes your issue or try to start the MCEBuddy engine from the Start Menu as a command line engine (which again requires you to be logged in).