Reciprocal link exchanges is probably the most common method of gaining website popularity. Unfortunately there are a lot of bastards out there screwing people over. The only reason they can get away with this is that people don't know better. I'm trying to do my part to change this.

Here are some of the things I've seen people do that you should watch out for:

• Link pages that aren't reachable from the site's index. This is probably the most common one I've seen. People will submit links to your exchange and the link to your site is on a page that has no links going to it, which means it is completely useless. There's no way someone could do this on accident, so I would avoid dealing with anyone that is dishonest enough to do that. This is quite common with automated link exchange programs like linkexchanged.com or gotlinks.com. It is now standard practice for me to go to a site's root page and look for their links page that contains my link, and if I can't find it easily I don't accept the exchange.
• NoFollow links - This is a relatively new issue, as search engines are supporting the rel=nofollow flag on hyperlinks. The bad part about this is that it isn't easily noticable without viewing the page source or using special browser plugins. If a link has this parameter added to it search engines act like the link isn't there at all, rendering it useless for site popularity purposes. You should also be on the lookout for sites whose link page link has a nofollow flag on it, so the entire links page won't get indexed. Some people sell links like this on purpose just for traffic, but that is usually disclosed upfront. If you catch anyone giving out link exchanges with nofollow tags, avoid them like the plague. The best way I've found to deal with this is to use a toolbar for firefox called Search Engine Status, which has an option that will highlight any nofollow links.
• Links Pages loading in frames/iframes - This isn't much better than the previous 2 mentioned things, but I've seen it quite a lot lately. Many people will load their links pages in frames from sites/domains with no PageRank. I have seen many links pages actually being loaded from geocities or some other free host, but it is hard to tell if you aren't looking for it. One easy way to tell in IE is to right click the area with the links and hit properties.. You'll be able to see if it is actually loaded from a different location if the address doesn't match that in your address bar of the browser. This isn't necessarily a problem, but in most cases these pages aren't indexed in any search engines, making them useless. Webmasters do this on purpose so they don't have to link to anywhere from their precious site. I hate those people.
• Redirect Links - Some web site packages people use (CMS systems) do this so it isn't necessarily someone trying to scam you, but you will quite often see some kind of out.php?id=4095 for your link rather than your site's url. These scripts redirect visitors to your site, but you don't get any search engine benefits from it. Unless you expect this link to get a lot of clicks, I would suggest avoiding going out of your way to trade links with these sites!

~Wealthy Webmaster