Hi Frds,

              Whats difference between db2diag.log and instance.nfy file??

Thanks & Regards

Pawan

Administration notification log - instance.nfy
    When significant events occur, DB2 writes information to the administration notification log. The information is intended for use by database and system administrators. Many notification messages provide additional information to supplement the SQLCODE that is provided. The type of event and the level of detail of the information gathered are determined by the NOTIFYLEVEL configuration parameter. However, detailed diagnostic information is not written to this log.

db2diag.log
    Diagnostic information about errors is recorded in this text log file. This information is used for problem determination and is intended for DB2 customer support. The level of detail of the information is determined by the DIAGLEVEL configuration parameter.
 
There are two types of entries in the db2diag.log file:

     1- Administrative events. These entries are valuable, since they indicate whether events such as backups and restores started and finished.
     2- Error information. This information is only useful if you are trying to diagnose an external symptom, or if you have already determined what the error is and are looking for more information. For example, when an application receives an unexpected SQL code, or when a database crashes, the file can contain error information, including pointers to dump files.

notification file is at instance level???????

yes , all event that happens at database and instance level, it is record in the db2diag.log and instance.log