Do 404s affect your ranking?

One of my friends' websites (which I help maintain) has about five hundred 404 errors in Google Webmasters, and 120 unreachables. These have mostly been caused by faulty plugins (all unreachables are from a translator plugin) or human errors. Most of the 404 that are linked to were detected as long ago as last year, and they won't go away. My friend has an OCD about his ranking (he's currently middle of firstpage, trying to get to #1 position) and he thinks these errors are somehow hurting him. I keep telling him that Google doesn't care about these 404s because they didn't have any ranking to start with, and google treats 404s as "gone".

So, do they affect your ranking?

no they don't, otherwise it could be easy to sink your competitor just by linking to nonexisting pages

just redirect all 404 to your index via htaccess

afaik, they don't harm ranking, but as said above, do a redirect and it would all be sorted out. It will at least stop people visiting the site from closing the page because the page is missing.