Hi Kristen,
Neither of these files has the code that produces that link.
; Joomla! Project
; Copyright (C) 2005 - 2012 Open Source Matters. All rights reserved.
; License GNU General Public License version 2 or later; see LICENSE.txt, see LICENSE.php
; Note : All ini files need to be saved as UTF-8 - No BOM
; Note : %date% will be auto replaced by current year !Don't translate
MOD_FOOTER="Footer"
MOD_FOOTER_LINE1="Copyright © %date% %sitename%. All Rights Reserved."
The last line above shows that it only prints the copyright information. You can turn off the copyright in the gantry template manager features section, but it probably won't affect the link you're trying to remove.
Look in your module manager for a module that is in the footer position, or look at your index.php file for the template and see if there is code there that refers to the privacy policy.
Let us know,
Ed