Asking if directories and link exchanges a waste of time for search engine optimisation is quite a big question, not all directories are created equal, DMOZ and Yahoo are two excellent directories and getting into either of them should defiantly help your positions in the search engines, however there are also a large number of directories that are not worth looking at.

Link building for Search Engine Optimisation (SEO) is more about the quality of your links than the quantity, it is easy to build links back to a website by trading them with other site owners and filling out directory listings, but you need to consider where is the value in this.

The main search engines employ very sophisticated software to calculate the importance of links, the relevance how difficult it was for you to get it. If link does not have a lot of relevance, is of low importance and was easy to get then you get a low value score for that link, if however the link is very relevant, has importance and was difficult to get then that link receives a higher score.

In a perfect world all your links would be of excellent quality and you would get a great SEO score from the search engines, but you do not get this in the real world and so you need to aim for as high a score as you can get but at the same time not get too obsessed with just the quality.

So a link from a relevant directory may be more valuable to you than one from a site that has no relevancy, the same is true for a traded link, so long as not all your links are swapped or traded and you have some quality along side the relevant but lower scoring links that is a good combination.

So as not all directories are created equal so not all links are equal either.