Hello,
During inputs (in SAP upgrade tool) the system ask if you want transaction log on or off. you can put the log in simple and made backups when the SAP tool said/ask for them (between activities). This is the better choise.
The auto shrink option must set off and means "downsize a SAP database" in this case a log file. So your problem is not reduce the log file but the activity of log file. This activity needs space if you don´t do backups or put the logfile in "simple" mode.
Best regards
Joao Vagarinho