Drop down menu
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Does the first anchor text link rule ( the first link is given weight ) applies to links in the body of the content only.
If there are links in the drop down menu, and in the body of the content, does the above rule applies to links in the drop down menu.
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Whichever link occurs first in the coding, so if the first occurrence is in the menu, yes - that's the generally held belief - though some have demonstrated ways to get around it (I don't have links, sorry).
In general links within body content are given higher value than links elsewhere, so that's why some SEOs have tried to get around this 'first anchor text link rule'. Google (and other search engines, probably) can recognise the difference between menu's, sidebars, footers etc. and main body content - it's something they're getting better at all the time so I wouldn't be surprised if this changed. But then again it could be easier for people to game so perhaps it won't.
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