Keyword Density

It is still a factor?

[5x54u]

A market I follow is showing a site in the #1 on G that has a KW desnity of 30%.

Background info on site:
8 years old
ugly static html
Does not validate (40 errors on homepage)
Over optimized link titles (kw, kw, kw this or that)
homepage has 0 contextual content - rather 81 different links pointing to internal pages
Y - shows 312 backlinks only a 1/3 of what position 2,3 and 4 have for same G query
no apparent use of cloaking
site has 173 pages total

Is there something else I am missing? My tought would be that in the next G roll it will fall very far in the SERPS.

Thank you for any thoughts on this subject.