One thing about links before we go further is can links to your site penalize you... let's thing about this for a moment. If bad sites linking to you could penalize you then your competitors would all be putting your links on bad sites. You have no control over who links to you ... only who you link to. We'll discuss this further as we go along on how to choose a site that would be a good link.
A good article discusses this on SEO Chat -
The rest of the week we'll talk about choosing sites you want to link with.