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...but, two updates later, the SERPS have still not budged. I should have dropped like a stone in some SERPS, and seen some shift upwards in others, and yet, nada.
I recall seeing some posts on something called the "sandbox", though a site-search here doesn't bring anything up. Appreciate any feedback on what is going on, kind of messing with my head, not seeing the usual links=PR=better SERPS equation kicking in.
All links are of course (possibly over-)optimised, in that they all contain the KW phrase in the anchor text.
Pretty sure that internal links do count, as it's the method in the past that I've moved PR around within the site to get better SERPS. Seems to have stopped working...
1) Internal links may be being sandboxed. In other words, the effectiveness of the pr transfer is being dampened for a limited period. The toolbar may show pr flow, but as far as the serps are concerned there is no effect yet.
2) Your footer is being ignored as duplicate
3) Your keyword anchor is being ignored as duplicate text.
4) Something else has happened....like you have lost a big link in from somewhere.
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In addition to above and 4 clues given by MHes, I would like to add that internal links do not appear to give significant weight in serps as it used to be in the past, especially if you have them overly placed on every pages of your site.
This can be observed quite well in fully-meshed sites where the internal pages that have no good external links would not perform vigorously like before. It looks like as though G neutralizes those links and they are not counted that much as MHes has hinted in his question. Therefore you won't see much changes in the serp.
If this oberservation is true, then it would be a good idea if you will reduce placement of your internal anchor texts down to less than 5% of your overall pages - I believe but not guarantee that you will see the difference.
For your friend's sites, I think your external links are sandboxed.