Yes it is true. The search engines are also looking at what is written in the anchor text of the link. Make links to your site with the words you want to rank high on.
Hello. I agree with Jim. Search engines digest text and they love text. In fact, it is advisable that you put a text link to each of your subpages and not just a graphic link.
EDIT: If you have no choice but to use graphic links, at least do this:
Put some keyword-rich alt attribute on the image tag.
yes, text link since the bot can read your anchor text as your keywords and for the image link, just add an alt on your image with your keywords and it will do...
this comes up alot in seo . its the same with flash , SE's can read what they so they are following a link blindly.
this is the opersite with Text links