I've had no side effects at all from it. I can agree with some of the posters above that it's hard on the hair... from what I had heard there are ingredients in it that are emulsifiers.. i.e., things that break up fat.. that are in the shampoo to break up the sebum layer on your scalp, and enhance absorption of the good stuff into the scalp. Ergo, using Nizoral excessively will dry out your scalp (which is GREAT for Ketoconazole application) but also dry out your hair (fats help keep your hair full).
I've felt these effects after using Nizoral.. the hair seems dry right after... but I only use it three times a week. So, it doesn't seem to have a lasting drying effect on my hair, in particular.
I don't doubt the comments above. I just say that perhaps you should experiment with the amount of Nizoral you are using for each application, and how often you are using it, and monitor the effects on your hair, and tweak as you go. Find a sweet spot with it, it can be done. From what I recall, the bottle says to only use a nickel-sized dollop of shampoo to treat the entire head... I would wager a guess that some folks probably squeeze a much larger amount into their hair when they use it, something on par with the amount of shampoo they use with ordinary shampoos, and are feeling the results of the excess application.