I notice on some websites adds a no follow link. Does that mean if they place my link on their site, I will not get credit from the search engines as a back link?
Yep - some engines (read: Yahoo and MSN) will follow (and count) the links anyway, but Google certainly will not.
Yes that is correct. Translated - a link with "nofollow" tells the SE spiders "I have this link on my page but I don't put any trust in it - please ignore it". The "nofollow" tag itself was "invented" by Google and as far as I know it was adopted by the other search engines too (not sure why the poster above says yahoo and msn would count and follow those links) Check here the original post from Google's blog with a lot more details about "nofollow" and here on searchenginewatch.com about Yahoo and msn being on board since the beginning.
Yahoo counts with certainty nofollow links. I had some really nice surprises to see some great authority links (from Matt Cutts' blog for example) counted. On the other hand, I'm not quite sure how Yahoo determine its SERPs, although I did see some traffic sent from it to my blog (my blog has PR0). Regards, George