As part of DSfW provisioning, the Universal Password Policy is enabled on the partition that is being mapped to a domain. This is extended to cover all the partitions that are mapped to a particular DSfW domain.
However, if the Universal Password Policy is already enabled in your environment and if you don't want to override it, then you must select the during DSfW installation. For more information, see Retain Existing Novell Password Policies:. Selecting this check box will mean that the already enabled Universal Password Policy in your environment is applicable to all the partitions that is being planned to be mapped to a particular DSfW domain. If you do not select this check box, then the users belonging to a partition (mapped to a DSfW domain) that does not have Universal Password Policy defined, will not be able to login to the DSfW domain.