TsPoet can jump in here, because I'm just a biology undergrad, but in general, your liver modifies most of the not-food chemicals we ingest into something less toxic, and it makes its way to the kidneys for excretion.

The fun begins, however, with lipid-soluble things. I'm not sure of the exact mechanism, but I imagine that while some of it gets flushed out, some of it ends up being deposited in adipocytes (fat cells). Most of the time, it's not a big problem. It becomes a problem when you start burning that fat.

Roxy, may I ask why the concern about nail polish?