Depending on your infrastructure you need to decide if you wish to encrypt the NLO files which are used by DAOS. Note that copying the NLO files from another Domino server will work only if DAOS encryption is turned off. DAOS encryption is on by default, and uses the server key to do the encryption; therefore encrypted NLO files are not portable between Domino servers. So if you backup files from multiple servers and use only one server to restore the files, then you need to turn the NLO DAOS encryption off. You need to turn DAOS also off if you use a cluster and wish to restore a application / database which exist on both server where DAOS is enabled.
The DAOS NLO encryption could be controlled via notes.ini entry DAOS_ENCRYPT_NLO:
DAOS_ENCRYPT_NLO=0 <-- Disable DAOS NLO encryption
DAOS_ENCRYPT_NLO=1 <-- Enable DAOS NLO encryption