My incoming links list was working find... and I know it reads off Google Search (see quote below when I edited the source). However I don't know if this is a Google issue, or a WP issue.
I noticed it after I upgraded, and I've never seen it before. I am getting "incoming link" notifications from friends' blogs that I visit, but I'm not linked in that specific post. There is no consistency whether I'm on their blogroll or not. And I haven't even left a comment with my URL on most of the posts.
P.S. I do use a FeedReader, and all the blogs are on it, but it's not Google (it's Shrook for Mac).
"This dashboard widget queries Google Blog Search so that when another blog links to your site it will show up here. It has found no incoming links… yet. It’s okay — there is no rush."