Hi Max,

> Requests are logged in context of a location where
> request
> execution ends up. As you have error_page 404
> defined, and no
> favicon.ico file - error 404 is generated and
> redirected to
> /errors/404.html. As a result request is logged
> in context of
> "location /errors/" where you have access log
> enabled.
>
> Maxim Dounin

thanks for the explanation - that was my initial thought too but as I'm rookie I wasn't sure. Thanks again.
In that case I'm hitting a wall while trying to figure out how to configure my server for the following scenario.
I have fastcgi_intercept_errors set in http block and have put error_pages directive in the virtual host definition above to handle the cases when someone tries to access PHP URI which does not exist – if I take it away then Im getting “no input file specified” – which I know makes sense as PHP-FPM is not able to find given file and reports back to browser.

The problem with this configuration is that the drop.conf file is completely "ignored" because of what you said - so when I take error_page bit out then drop.conf file is suddenly taken into account and favicon.ico is no longer being logged. The question is how do I handle this situation -> return 404 page when someone is accessing non existing PHP URI and at the same time disable logging as per drop.conf file ? Im banging my head against the table.
Any help appreciated.