Blog on my website or another domain for best SEO?

CashDoc,

Its all about the "link juice"... which is both a simple and incredibly complex subject. You will want at least a rudimentary plan for how you are linking (internally and externally) and where you want to focus traffic.

One option is to point major links and "juice" to your main homepage. This can help drive up the ranking for the home page and the site, but is not necessarily the most elegant plan. Its relatively simple, though, and in this case I would suggest putting the blog on your domain (mysite.com/blog)

Another option is to optimize your links and keywords for specific landing pages (which might just be a front page for a section). This is a more complicated strategy, but can really be powerful as you are focusing the links with the keywords on the page instead of "diluting" them by having all keyword/links going to the same page. In this case, you could go either way with the blog onsite/off... you can simply link to the specific blog posts and back again (if you are sharing keywords)

I suppose it really comes down to the keywords you are optimizing for and where you want to post for them... "shared" keywords, you should have a shared site. "Unique" keywords could/should have a different site.

If you have a separate website for your blog, then you will probably want a different host/server. You will probably get a bit more power if the main IP address of the server is different.

Thanks for the info.
For instance with ezine articles you can have 2 links.
Would this be a good strategy. One acnchor link to the home page and then the other link to the blog post which is optomized for the same keywords?

My plan is to submit an article to ezine etc. and then rewrite it for my blog. Trying to maximize my content.

Thanks

Thats a great idea.. just make sure that the linked text is the keyword phrase you are targeting. Keep things simple, and let them build over time.