I agree 110%. It is completely pointless to index a column with that amount of NULLs. In practical fact I would go further: what is the point of a NULLable column? I try to design my tables such that every column is NOT NULL. In practice this is not realistic, but I try to adhere to this principle whenever I can. For example, it's possible to add a new Hire while not yet having determined which department s/he will work in, and hence which manager s/he will report to, but typically I deal with such scenarios by creating an "Undetermined" value in the corresponding lookup table.
Arthur