So I just returned two separate items that were purchased either all or partially with notes. Interestingly, the boots that I returned in store had the entire purchase amount returned to my Nordstrom card as a statement credit, not as a new note. Maybe it was how the SA processed it, or maybe it was that it was only partially purchased with notes, I don't know.
But I also returned a tee that was fully purchased with notes,this time by mail, and they sent the refund as a gift card via mail. Odd. So in neither case did I get it back as Nordstrom notes, although I guess a gift card is functionally identical.