My content is good, internal linking is good, overall my site ranks well on msn, okay on yahoo, but I noticed once I put a few links from some ads I posted it went from not found in the top 1000 on google to #3 for some key phrases. Anyways I want to learn more about backlinking and external linking. I know the basics as I worked for an seo company but I really only have experience with the internal seo, so let me know what some good resources are for guidelines, etc of backlinking and external linking and how it affects seo. Thanks!

Chk this link. This would guide you in building links.

awsome, just what i was looking for. thanks! quick question: is a backlink viewed by search engines differently depending on what page it is on? Let's say you link one of your sites from the homepage but your back link is on an inside page of the other site, does one site benefit more from this backlink?

Yes. Each link is judged by many factors and the strength of each page varies. Home pages tend to be better in general but not always. Inner pages can be, and often are, just as good or better.