SeoBook has a writeup comparing the Search Algorithms of Google, MSN and Yahoo.

My take:

Yahoo - Biased toward Commercial Content with plenty of reciprocal linking that still acceptable.  Does check for link quality but not as carefully as Google.

MSN - Does not check the quality of backlinks very well and put more focus in On Page factors, but aren’t considered as good as Google or Yahoo for On Page.  Arron Wall thinks MSN will like many new links (like blogs) but that’s unproven - just his opinion.

Google - Best at deciding the quality of a backlink - biased towards informational and educational sites for Organic results over Commercial (thinks Commercial sites should pay to be on the top of AdWords if they want to be ranked highly).  Much stronger duplicate content filtering than the other search engines.  Crawl depth is a factor of how worthwhile Google determines your site to be for quality information.

More detail on the differences between the major search engines can be found here.

In my opinion, there are results in Yahoo that defy logic, where garbage spam sites that have no quality or original information are on the top of results.  It’s a hodge podge of things that I find it difficult to optimize for since it’s not obvious what factor is really the most important one that bias the rest.   Some say that a high ranking in the Yahoo Directory (more popularity) helps with Organic Ranking in Yahoo.   Or maybe the sites that are ranking the highest are also advertising on Yahoo and spending a bit of money - Yahoo is known to skew to the commercial - and maybe they’re more likely to reward payoffs.

MSN seemed simpler - just optimize the page - and if SeoBook is right - and they can’t determine the quality of backlinks very well, it makes sense that you’d want to really do a good job with your on page factors.

Google is getting into the intension of a page big time; if they think your page is commercial it wont be in the top 5-8 positions, that’s reserved for sites that are determined to have better information.