I found a directory with a free no-follow link. Does this no follow defeat the purpose of putting my link in the directory for SEO purposes?
For the most part nofollow directories are worthless IMO. Try a different directory or start using a well maintained directory list that excludes directories with nofollow links.
i was asking myself same Question,, never found the answer,, but what i read, it increases the backlinks
The nofollow links may be counted by Yahoo as they list nofollow links when you type link:www.domain.com Nofollow links won't count towards Google rankings or PR.
I would suggest you to just skip that directory unless it's some famous directory like DMOZ. DoFollow directories are (almost) useless, let alone NoFollow dirs.