I had recommended hot pepper as a non-toxic dog deterrent. Recent reports indicate that it can actually be harmful to dogs. There may be ways to use it safely, but until I learn more about the problems that have been reported, I'm recommending against doing this, and leaving this instructable up only to help spread the word about the problems.
Hot peppers are a well known approach to deterring dogs from relieving themselves where you don't want to step in it. It's effective, and I thought it was no more toxic to dogs than it is to people. But that may not be true.
The idea of this instructable was to help keep the pepper in place--if you just sprinkle Tabasco sauce or cayenne powder, it's likely to wash away (if it's rainy) or blow away (if it's not). My solution was to mix cayenne powder with oil, and dribble that on the ground around the area you want to protect. The oil not only helps prevent the rain from washing it away (and the wind from blowing it away), but it also helps bring out the capsaicin, the active chemical in hot peppers, which is soluble in oil but not in water.
It worked for us to solve a regular problem, and lasted through at least several days of very heavy rain.
We never had any indication that it was harming dogs or wildlife. My assumption was that the dogs were using their noses to avoid it, and were not eating it. And that even if they did, it would be unpleasant and not harmful. As a regular consumer of a lot hot peppers myself, I didn't think there was potential for real harm. Unlike a chemical burn, the "burn" of hot pepper is a perceptual trick, not a result of physical harm. But this seems to have been wrong...I'll add more information here as I learn more.