When DisallowOverlappingRotation is set to False the new worker process will be created while the existing one continues. Then once the new one is ready the old will be shut down. Setting it this way has the least impact on your end users.
When DisallowOverlappingRotation is set to True the old worker process is shut down before the new one is created. This will cause your site to be down longer while the worker process is being recycled. Setting it this way may be required if an application in the application pool doesn't tolerate multi-instancing.
Logging Application Pool Recycling Events in IIS 6.0
You can change which Application Pool Recycling Events get logged by modifying the LogEventOnRecycle attribute in the IIsApplicationPools node. The available flags are: