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On a Windows Server 2008 R2 Standard Edition Domain Controller, with Windows 7 and Windows XP clients, is it "OK" to keep the setting below for Event Log files?

GPMGMT screenshot

And which setting will apply? Between Maximum log size of 1 GB or Retain Log to 30 days, which will take precedence?

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No, you shouldn't set your logs like that, and both will apply. Your Event Logs will have a maximum size of ~1 GiB, and events will be over written after 30 days. In all likelihood, this means that your logs will never reach the max size, because they'll keep overwriting themselves every 30 days, well before they hit the max size. (Unless you have very detailed logging for everything, then you could conceivably fill up a GiB with logs in 30 days.)

Retention by days is really only useful if, as the explanation says, you archive your logs off every x days, because then your server Event Logs will only contain events that aren't in the archived copies. That you had to ask the question tells me you're very unlikely to be in such a situation.

Instead, you should [probably] set the log files' Retention method to Overwrite event as needed and leave the retain [type] log setting undefined. When they hit the maximum size, instead of preventing the system from starting up, they'll just overwrite the oldest events.

Descriptions for log retention by days

And, by the way, you should read those explanations and other documentation provided. More often than not, it's there and explicitly precisely to prevent you from shooting yourself in the foot for not knowing better.

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