A recent Google webmaster help video brings up an interesting question: should a webmaster nofollow internal links within their site or does it not make any difference because they are simply internal links?
Here's the question asked of Google's Distinguished Engineer Matt Cutts:
Does it make sense to use rel="nofollow" for internal links? Like, for example, to link to your login page? Does it really make a difference?
"Rel='nofollow' means the PageRank won't flow through that link as far as discovering the link, PageRank computation and all that sort of stuff," Cutts said. "So for internal links, links within your site, I would try to leave the nofollow off.
"So if it’s a link from one page on your site to another page on your site, you want that featuring to flow, you want Googlebot to be able to find that page," Cutts continued. "So almost every link within your site, that is a link going from one page on your site to another page on your site, I would make sure the PageRank does flow which would mean leaving off the nofollow."
Of course, there are always exceptions to the rule, and things like login pages can be the exception. He said it doesn't hurt to put the nofollow link for a link pointing to a login page, or things like terms and conditions or other "useless" pages. However, it doesn't hurt at all for those pages to be crawled by Google.
He brought up the fact that nofollow is a useful tool when it comes to linking to outside sites. He brings up blog comments and forum profile links specifically as something that should be nofollowed. And when you're giving an authentic link, you want to make sure that is the site you can trust and that you're giving your stamp of approval.
Cutts made a good suggestion, saying if there are pages within your site that you will be placing nofollow links pointing to it, then it makes more sense to use no index so that those pages aren’t indexed at all. And he made another valid point that sometimes having those login pages indexed is useful for users who want to find a login page so that they can simply log into your site, especially if it's the type of site doesn’t have the login fields on every page.
Cutts closed with an important reminder: it makes sense to ensure Googlebot is able to crawl all your pages on your site.