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Does this add-on prevent other add-ons with location detection to work correctly?

If you use other add-ons with features showing your location (eg. "Country Flags" by snog) those add-ons will often work correctly even for users with "Do Not Store Any IP Information" permission assigned.

Such add-ons often check the ip address themselves and do not rely on what XenForo stores in it's ip or session database tables.

You have to set the permissions in such other add-ons correctly, if you do not want the location to be shown.