If this is the first time that you have received something relevant to an N award, then you have received a warning, not an actual N award (also known as an N determination). At this stage, there is no threat to your completion of the course for which you received a warning. However, should you receive a second warning, you will be at risk of receiving an N award at the end of the course. This is why it is important to ensure that you address the issues that triggered the initial warning. This is if you wish to keep the subject in question.
However, since you mentioned that you wish to drop the subject for which you received a warning, the warning will essentially be removed from your record. The way this works is that dropping a subject means that it will not be recorded as a course that you completed, i.e. it is as if you never took the subject, which negates the effect of the warning because dropping the subject is the equivalent of suggesting that a warning was not issued because the course was not taken. Of course, dropping the subject in year 12 means that you did complete the year 11 course of that subject, although this is insignificant because not only did you not receive a warning in the subject during year 11, but dropping it in year 12 dismisses any possibility of it counting towards your ATAR.
I hope this helps!
