By default the Altiris Services will run using the ApplicationId account defined during the NSSetup. This is the recommended mode of operation.
However, it was found that sometimes, when the Notification Server is rebooted or during upgrades of Altiris Solutions, the Altiris services are stopped and require the administrator to reenter the password in the Service Manager (services.msc). Changing the Altiris services to use the Local System Account can help resolve this problem.
It is possible to use the Local System Account to run the Altiris services but there are some risks related to GPOs that can limits that account in some way.