What you have effectively by running the backup log command is emptied the water out of a bucket. The contents of the bucket are gone, but the bucket still remains, if you catch my drift.
To shrink the file, you must now run the following...
dbcc shrinkfile (<virtual file name here> )
and it will then shrink back to it's original size. To find the virtual file name, run sp_helpfile from within the context of the target database.
Hope that helps,