Dmoz and Google both use the underscore seperated keywords in file/foldernames. I would imagine overuse of the keys in the document would be more of a concern unless you mean widget_widgets_widgeting.
Widgets_yourtown-whateverproductorservice is perfectly fine.

I was under the impression the underscores were non-separators, and that "green_widgets" would only turn up in a search for "green widgets" and would not be found in a search for "widgets" .. whereas "green-widgets" would be found in either search.

?

I guess this is a bit of a grey area.
Yes underscores are non-seperators but they dont have to be in the same sequence as the search. A search for widgets green would still fetch a file green_widgets and i thought as well just for widgets or green. I guess it might be best to use both in some cases, underscores in file and dash in the folder or vice versa but not the exact same keys.
This is a great question,been covered here b4 but would be hard tofind the thread , at least this is bumped, maybe someone with more experience can chime in.

Yeah, we've talked about this many times before. Google will look at green_widgets as one term and look at green-widgets as two terms.

The best way to see how it works to simply to go to Google and do a variety of searches.

And getting back to old_expat's questions, yeah, like anything else if you overdo it, maybe you won't get burned, just singed a bit around the edges. If the stuffed keywords throw a page above whatever the upper threshhold is that Google likes to see it might affect a pages algo score. But you never know, maybe stuffing some keywords in the file name will put you right in the sweet spot. There's only one way to find out...

One thing i wonder about using green_widgets is would you ruin your potential of being found for just green or widegts?
I never see a single keyword search in my logs so was never sure if it was because of underscores or lack of rank. I thought it still recognized individual words as well as as single phrase. I really winged it my first little while, kind of hacked it out,just didnt have time to develop and study.

One thing i wonder about using green_widgets is would you ruin your potential of being found for just green or widegts?

On Google, yes, as green_widgets is seen only as green_widgets, not green or widgets. Whereas green-widgets is seen as green-widgets, green widgets, green and widgets.

But, when it comes down to it, whatever is factored into keywords in the url by the SEs is probably such a small piece that it really isn't worth worrying about too much.

And again, play around with it on the different SEs and see exactly how each one treats an underscore and a hyphen.

For those who are Supporters [webmasterworld.com], there is an interesting thread on the topic of "-" versus "_" called: Dash vs Hyphen vs Space vs Underline [webmasterworld.com]

Thanks for the info Jimbeetle and Caveman, I bet that thread mentioned must be a good read.