Is my assumption that if I have 10 links but 5 have the "NOFOLLOW" tags, it'll increase the value of the other 5 since I'll be splitting the PR value in 5 instead of 10
Yes, that is 100% correct. NOFOLLOW tells rebots "DO NOT COUNT THIS LINK!", so search engines don't even see it.
http://siteexplorer.search.com shows a whole bunch of nofollow links for one of my sites (it's from a forum). I believe even google shows some. I think the bots see it and understand that you don't want to give pagerank, but I guess they only value them lower.
As I said, that is true for Google, even though I am not sure that there will be absolutely no value. Unless you know their algorithm you cannot convince me otherwise. Since this was introduced by Google (at least thats what I think), I don't know how Yahoo and MSN handle these. I can see (Siteexplorer) that Yahoo takes notice of those links. If they count towards their ranking, who knows. I wouldn't say they are completely useless.
You should probably do some reading then: http://www.google.com/search?hl=en&q=matt+cutts+nofollow&btnG=Google+Search
From what I've read, nofollow links are still counted, but they don't pass any PR. I have no idea if that's really true and haven't done my own tests on that, so take it with a grain of salt.
You said it will INCREASE the VALUE of the other 5 and that is NOT correct. lets say you did a link exchange the exact way google wants you to do it. lets say those are +10 each. so you did 10 and each one is +10. But now 5 have a no follow tag. Now you need to minus the 5 wiht the no follow tag. so u have 5 links coming into your site with a +10.. becaus a site uses a no follow tag doesnt mean another link on that page wihtout it is going to give it MORE value.. it should DEvalue it though!!
No follow links are not counting where it matters the description is in the name here. the spiders do NOT follow the url so what does it matter if your link is on the site.. it cant follow it so even if it may be COUNTed while using the link command it is not truly counted.
Didn't I refer to Yahoo and MSN as well? Maybe google doesn't count them and maybe it does, who knows, but I haven't seen anything about Yahoo and MSN. Further, if you choose to believe everything a Google guy or Google expert or Google themselves tells you about how Google works, thats certainly up to you.
I tend to agree with you andre75, but SEO's are successful for a reason and it's not always just luck. So you still need to take both sides with a grain of salt and see the proven methods that are already out there.