Up until recently i would have said they spider the iframe only, but recently i have heard that some one managed to get a PR5 and rising just by Hot-Linking images from larger business servers. It came to light that Googlebot actually counted the Hot link as a one way link and with recently finding this out i am aware it works the same with iframes and GBot follows the Url.

This is what i am lead to believe but with no dout many will have other concepts on how this works.

Not to say that my coding is correct or incorrect, but in looking through my Webmaster tools/stats, it appears that the GoogleBot finds issues with them and has created errors.

I will make a test as soon as I find the time, it would be interesting to find out ....

CSCGal, here is a reference that I found on DomainTools that states "Iframe content is usually invisible to crawlers, so avoid using them."

As for the GoogleBots and how they work with iFrame Tags, I'm still not sure. We have two iFrames on the site, both I believe are related to our Amazon Store and I don't think Google picks those up.

Still looking!