AFAIK definitions are to be considered as filters. So a notification contact setup d,u,r would mean unreachable notifications ARE sent to the user IF they are genereated. as opposed to a notificiation contact definiton of d,r where an unreachable notification would be filtered.
notify_unreachable 0 is bad if you have some hosts where you want to be notified for unreachability, which as i understand it is the case.
Still i don't have a reasonable idea as to why it IS notifying.