I think another particularly great free classifieds website would have to be
You basically get to come up with your own design for you ad and it post right on their home page for a city location. Its all visual oriented and every ad is completely distinguishahable from there other
It most certainly does not.
Simply advertising your site and sourcing traffic from it will not have an impact on your rankings unless the source is a harmful.
Particularly for small business advertising, I would suggest you try this website:
Allows you to create banner style visual ads for free and showcases the ads on the site's home page
Here is another FREE advertising site but they do it differently. The unique thing about it is that its all visual based Gallery Ads that you design yourself.
URL is http://www.adsmack.com
Be sure to check out the Gallery pages!