Hey There!
Samuel has provided good advice and resources. Very nice! In answer to your recent question, yes, it would definitely help if the client were physically located in his desired city, and sometimes, clients will ask if they can swing this with a virtual office, a Regus office or P.O. box. This question comes up all the time, because the temptation is so great, and in such cases, it's up to the Local SEO to tell it like it is. Some people get away with this for a time, but chances are, they will eventually get caught. Linda Buquet just started a great thread at her forum on this:
Might be useful to have that link on your browser when you talk about this with the client