In a perfect world, all email clients would render our designs the way we intended it to be. Seeing as how browser compatibility for the web is still some way off, email client standardization would be eons away from reaching display nirvana.
Together with Outlook 2007, Lotus Notes is a very difficult email client to comply your designs with. Furthermore, there is a general lack of concrete and reliable information on how Lotus Notes renders HTML.
IBM has claimed that as of 2006, Lotus Notes continues to be on 125 million seats - Wikipedia
A general rule of thumb is: for B2C campaigns, or personal email addresses, you can generally ignore Lotus Notes support. However, be aware that many large corporations continue to use Lotus Notes, and its impossible to tell which ones are still on the platform.
As with most best practices in coding HTML emails, the more primitive the code, the more likely it'll work well (or at least degrade gracefully) in Lotus Notes.
Use a master table
Use a container table that contains all the internal and/or nested tables used for layout purposes. This keeps the overall layout and width of the HTML email constrained and less likely to break.
Leave a margin around the master table
If we were using CSS, we would define this as margin. Naturally, CSS support in Lotus Notes is as poor as many other email clients out there. However, for Lotus Notes, try to leave a marginal spacing around the master table, or at least set a padding of 5px or more on the master table. This ensures that internal elements don't start "sticking" to the edges of the Lotus Notes viewing pane.
Forget anchor links
If you're delivering a long newsletter, you've got to drop the idea of anchor points. They don't work in Lotus Notes. Period.
Avoid colspan
Going one up in terms of terrible HTML rendering comparatively to Outlook 2007, Lotus Notes hardly renders colspans properly. And there doesn't seem to be a consistent display when it does. You've got to bring down the complexity of your design and introduce rows (as opposed to columns) if possible.
Define the width of EVERY cell
You've got to be absolutely spot on in your width calculations with Lotus Notes. Unlike regular web-based email clients who render tables to its maximum set if undefined, Lotus Notes will treat each width definition strictly. If you've failed to define one of your columns to complete a 500px email width, you can be sure that it'll break miserably.
You can't center emails
Another of Lotus Notes' unexplained phenomena, email designs GENERALLY cannot be centered in Lotus Notes. The reason why I mentioned "generally" is because sometimes, it does display a centered design correctly, and sometimes, it simply doesn't. That's right, you can start taking our your tissues now....
Be sure that your td cell widths are accurate. Unlike web browsers, which automatically set all cells to the widest-defined width, Lotus Notes sizes each td cell based on its defined width.
Strange borders around GIF images
Designers often complain about strange borders (sometimes red, sometimes black) appearing around GIF images where it was perfectly fine in other email clients. The reason for this is the matte or background color data that is saved with the GIF image. This matte or background color will show through and generate a border around the image. The solution for this is to change the matte to match your background color, or simply use JPEGs instead.
CSS support
By now, you should be practising using the <font> tags for text formatting. However, IF you do have some custom stylehseets in use, they will be conveniently ignored by Lotus Notes. Strangely enough, if you comment away the stylesheets, Lotus Notes starts to recognise them. Puzzled? So am I, but this trick seems to work generally for a number of emails I've tested.
There are tons of other bugs an quirks for Lotus Notes displaying HTML email. Those listed above are but the more common problems and occurrences which designers in general would face at one point or another when dealing with Lotus Notes. If you come across anything else that may be critical but not listed above, I'd like to hear from you and I'll try to get to the bottom of it.

It could be useful to point out that the latest version, Lotus Notes 8, actually uses an embedded browser to render HTML emails, so on Windows, this is currently Internet Explorer. Therefore it is fair to say that they will suffer the rendering issues and limitations of the browser.
Granted, older versions of LN don't have the best reputation in this area!
Posted by: Simon Scullion | July 15, 2008 at 10:05 PM
Why formatting emails as HTML at all??
HTML-formatted emails is a PAIN IN THE ASS, because of the security risk and the possibility it can contain malicious code, together witht the use of Microsoft crappy software (Outlook).
You online marketing guys are really stupid idiots!
Posted by: Michael Pedersen | September 09, 2008 at 10:35 PM
Hi I am sending an email from SQL SERVER 2005 to a Lotus Notes Client. The email renders almost perfectly except for an annoying character that seems to appear out of nowhere. Its this chsaracter "! ". Eg "This Link will open the Manage Now application in the IDC Alive Tool (An Intra! net userid/password." Look after Intra. I do not know how this charatcer get there. Its very annoying
Posted by: Roger Bowring | December 31, 2008 at 04:08 PM