When exactly will an enemy drop its 'rare item' on death?

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An enemy can drop an item a certain percentage of the time. An enemy can drop a rare item a certain percentage of the time when it does not drop a regular item. (say that 10 times fast!)

To decide what item (if any) an enemy will drop when it dies, consider:

remainder = 100% - item%
item% of the time, drop (Item).
(rareitem% * remainder) of the time, drop (Rare Item)
otherwise drop nothing.

Consider this example:

Item = Potion
Item% = 50
Rare Item = Elixir
Rare Item% = 50%

therefore

remainder == 50%  (ie. 100% - 50%)
50% chance of receiving a Potion.
25% chance of receiving an Elixir. (ie. (50% of 50%) == 25%)
25% chance of receiving nothing.