I tried erasing the data on the USB drive and recopying using
cp -rp /var /tmp /mnt/sda1
I can now see that the /mnt/sda1/var/log/lighttpd and /var/log/lighttpd directories have identical permissions. Unfortunately though on restarting lighttpd the same problem still remains.
Permissions look like this:
drwxr-x--- 2 www-data www-data 4096 2010-05-23 06:25 .
drwxr-xr-x 11 root root 4096 2010-05-25 13:42 ..
-rw-r--r-- 1 www-data www-data 1227505 2010-05-24 18:38 access.log
-rw-r--r-- 1 www-data www-data 49853 2010-05-23 00:02 access.log.1.gz
-rw-r--r-- 1 www-data www-data 515 2010-05-24 18:39 error.log
-rw-r--r-- 1 www-data www-data 3436 2010-05-22 19:08 error.log.1.gz
Also, deleting the log files within /mnt/sda1/var/log/lighttpd still produces the same "permission denied" error, which suggests that the permission problem might be related to the directories rather than the error.log file.