Will enabling Physics in Nvidia display settings hurt Performance?

So far the only problem I had was trying to use the physics card + the graphics card together. I got worse performance with that than I did just using a single graphics card with physics enabled. I saw no slowdowns with or without it........ so far. Who knows how intensive it'll get in the future.

Ill benchmark with it enabled and without and post results shortly

I never noticed any performance hit in UT3 with my 8800GT with physX activated.

Then it isn't doing much of anything then is it?

It will definitely affect performance, but whether you 'notice' it or not depends on alot of factors, including yourself.

Think about it processing power is finite, if you enable emulation of a PPU to do a physics workload ontop of the graphics workload, plus adding more CPU workload, if that doesn't affect your performance, then either it isn't working or you're gaming at a very low level that your rig wasn't being pushed to begin with.

It's not a negative in and of itself, like I said, just like many other positive things, they affect performance too, whether that matters depends on the person and their preference for those things.