The use of XHTML in the context of SEO is a matter of debate. The consensus tends to be that using XHTML falls into the category of optimization efforts that provide certain benefits for the site as a whole (extensibility, ability to use XSL transforms) but offers little or no added value in the eyes of the search engines. That being said, as the number of pages that search engine spiders have to crawl continues to increase every day, the limits to how much the spiders can crawl are being tested. This has been recognized by SEOs and is reflected in efforts to trim page sizes down to make a site more appealing to the spiders. Now it is time to start considering the significant benefits that a well-formed XHTML document can potentially offer to search engine spiders. [More]

One topic of controversy regarding web standards has been Internet Explorer 7 not supporting the application/xhtml+xml MIME type, which essentially means not supporting true XHTML as specified by the W3C. Of course with this being related to Microsoft there is the expected amount of flak coming from the anti-Microsoft camp. That said, even once you've filtered out the extremes from the discourse, there are still a lot of people who think Internet Explorer 7 killed/is killing XHTML. [More]