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What does it really mean in SharePoint Designer 2007 with regards to 'Set as default master page' and 'Set as Custom master page'? Are there really differences between them?

And at what type of scenario, should we use the 'Set as default master page' and what type of scenario is best to use 'Set as Custom master page'?

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up vote 6 down vote accepted

Hi custom master page is site master page used for publishing pages only and default master page is system master page, to know more please leaf through this article

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The short story:
Usually you'll set the master page as both default and custom master page, the most common exception being a very customized master page for publishing which can't be used for ordinary pages in which case you'll only set it as custom master page.

The full story:
When creating pages in SharePoint your main options for setting the MasterPageFile property are one of two tokens "~masterurl/default.master" or "~masterurl/custom.master" the latter is mainly used for publishing pages as you can read from the Site Master Page Settings page:

Site Master Page = ~masterurl/custom.master = Custom master page
The site master page will be used by all publishing pages...

System Master Page = ~masterurl/default.master = Default master page
Use the system master page for all forms and view pages in this site...

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