N'Zogbia has returned to midfield after a spell out of position in defence following Jose Enrique's successful introduction at left-back.
And Allardyce admits the last few months have seen quite a turnaround for N'Zogbia, who has finally won international recognition with France Under-21s this season.
The former Le Havre player had become unsettled last season, and seemed destined for a summer exit, but his future looks to be at St James' Park.
Babayaro, though, looks set for an exit as he now seems to be third choice left-back. But Sam admits, he still doesn't know if N'Zogbia is a 'true' defender.
Sam Allardyce: "I'm not sure what Chatles' best position is.
"He's certainly a talented player, and he's got to maintain the level he has set himself. He can't dip below that level.
"I'm quite excited about the ability he has got, and I'm encouraging him to produce that ability now he's back in the team on a regular basis.
"From what looked a dismal position for me and him, he's got international recognition. All of a sudden, we've turned it round."