Do not run nlnotes.exe from the Domino directory
I have always been against using the nlnotes.exe to launch the ‘Server-Client’ of a Lotus Domino installation but having a sepearate client-installation on the Windows box instead. This is a common requirement for environments with locally encrypted databases on the server in order to allow restoring data on the document level.
IBM has now published (or updated?) a technote outlining the reason for a dedicated client environment on the server.

January 5th, 2009 at 3:35 pm
Looks like this is only relevant for Domino 8.0x servers that have transaction logging enabled.
January 5th, 2009 at 8:54 pm
Well it either does affect servers with transaction logging enabled or all Domino releases from 8.0 onwards. It is suggested though as a best practice for all Domino releases.
There are a number of reasons. One would be that organisational policies might be applied to the server entity. As the ‘client’ being run is using the same address book as the server, the policy itself will be re-added to the whole organisation.
Databases opened through the ‘client’ session outside the domino directory will be available for replication, which might cause some distress …
I presume this list could be extended quite a bit to extend the case.
January 6th, 2009 at 6:32 am
There is a technote (Domino Server Policies Are Deleted When a User Logs in with the Server’s nlnotes.exe) that reports issues of policy or policy settings documents being deleted if nlnotes.exe is run for client access on the Domino server. We witnessed this in our environment.
January 6th, 2009 at 2:15 pm
@Matt: Nice one – guess this raises the question why the nlnotes.exe has always been shipped as part of the package at all. Here is the link to the technote.