Today’s Question: Should the XMP checkbox in the Catalog Settings dialog [in Lightroom] be checked at all times?
Tim’s Quick Answer: In my opinion, yes, it is best to have the “Automatically write changes into XMP” checkbox turned on. This option can be found on the Metadata tab of the Catalog Settings dialog in Lightroom.
More Detail: By default, Lightroom only saves metadata updates for your photos into the Lightroom catalog. I prefer to also have standard metadata fields updated in the image files for my photos. This provides two basic benefits. First, with this option turned metadata updates will be visible in other applications (such as Adobe Bridge) instead of only being visible within Lightroom. In addition, enabling this option provides a real-time backup of most of the metadata updates you apply.
Note that enabling this option will cause metadata updates to be saved for all supported image file formats in Lightroom. For non-RAW images (such as JPEG, TIFF, or DNG files) the actual image file will be updated. For proprietary RAW captures the updates will be written to an XMP “sidecar” file next to the RAW file.
If you apply metadata updates to a large number of photos all at once, having the option to automatically save metadata to your photo files can result in degraded performance. However, to me the benefits of having this option turned on more than makes up for any potential performance loss.
It is also important to keep in mind that not all metadata will be saved when you enable this option. Lightroom-specific features such as pick and reject flags, collections, Develop history, and virtual copies, will only be saved to the Lightroom catalog, even with the option to save metadata to your image files enabled.