Sierra_Dad - Good overview.
Re keyword difficulty and desirability, that's one of the most important things in SEO you'll need to gauge. No point going for unobtainable keywords, nor for keywords that aren't searched. You need to evaluate your competition and figure out why the top 10-20 sites are ranking.
You also of course want to make sure the target phrases are searched. Check in Google Trends as well as in the keyword tool.
Think hard about whether what you're going after is too general or too specific. General terms often get a lot of searches, but are very hard to rank on, and they're often too vague to convert.
Specific phrases are more likely to convert, often easier to rank on, but they're not searched as often.
Here are the kinds of things I look at initially, as quick indicators of how competitive the phrases are...
- though default searches will be all-the-word searches, to get a sense of how SEOed the area is, look at the number exact matches returned for your target phrase (ie, search it in quotes), and also try allintitle and allinanchor.
- how many of the top 10 results are for inner pages vs for home pages? SERPs showing all home pages indicate competitive searches.
- how many of the top 10 have keyword domains or company names?
- how many of the top 10 are 800-lb gorillas? If they're all unbeatable, don't go there.
- look at the quality of the pages that are ranking. That will be one indication of how the pages got their inbound links.
- look at the AdWords competition and AdWords cost on the Google Keywords Tool
- and look at competitive inbound links, using Yahoo's Site Explorer or the Majestic database, etc.