I always try to remember a lesson I learned from GuruBob: Successful marketers test and frustrated marketers don't.
So I like to test lots of things.... especially controversial ideas.
I've also always agreed with Ed that all the hoopla about "nofollow" links is silly and just for fun, I decided to do another test of a nofollow link to see what would happen, so here's what I did...
I created a new subdomain on an existing site. I made it "nofollow.oneofmydomains.com" and installed a WordPress blog on the subdomain. By using a subdomain, I avoided the possibility of it being listed on a domain registry database. In other words, there is no way for anyone (even Google) to know that this subdomain exists unless I publish links to it.
Just to make sure that Google didn't know anything about it, I let it sit for three weeks and then looked to see if it was indexed using the "site:" search attribute. It came up blank.
So then I went to one of my other sites (a totally different domain on a different host) and I created a single link to the new site using the "nofollow" attribute. I didn't even use relevant anchor text, I just used the word "link" as my anchor text. Because I created the link in html by hand, I was able to be absolutely certain the link included the nofollow attribute.
The site that I posted the link to gets crawled by Google about once a week and sure enough, about 10 days later I tried the "site:" search again and lo and behold, all my posts and pages on the new site were indexed and I was even ranking for a particular odd keyword that I decided to target just for fun!
This clearly demonstrates that Google does not ignore "nofollow" links (as some people say) and while a nofollow link may not pass Page Rank, Google is clearly paying attention to them and I think it is naive to believe that they are useless for ranking purposes. Clearly, Google is paying attention to ALL links and the fact that you have a keyword relevant link to your site is going to count for something with Google, even if it is a nofollow link. Obviously, Google (Matt Cutts) is never going to change their "quality content" mantra for how to rank, but I think it is just as obvious that nofollow links do get noticed and even if Google won't admit it, nofollow links can help you rank.
This is just one of the many tests I've done with nofollow and as far as I am concerned, anyone who says that nofollow links are useless simply hasn't done any testing.