I put all the css rules on my external css file on one line. I did this so that it looks all jumbled up and in this way discourage potential theives from stealing my css. The browsers still display my pages right but what I want to know is, will doing this be bad for SEO, or do search engines not look inside the external css file at all?

"Potential Thieves"?? Where did you get the idea that CSS was valuable?
Anyway, it won't matter to search engines...

I have stolen entire navigations and menus in the past (not something I'm proud of). To make the navigation rollovers to work I needed the corresponding css which I was easily able to scrap by saving the html page and therefore getting the css file also. Then I would just isolate the css rules for the menu I wanted to steal and copy paste just that to my page. And with firefox's media tab (in page info) stealing the images is also very easy.

I know just jumbling my css rules won't make it impossible (or even difficult) to prevent theft but just a little more discouraging.

Anyway thanks for your answer, does anyone else know if it won't matter or not?

Maybe this article may help. http://www.searchenginejournal.com/s...s-of-css/2211/

It will NOT affect your SEO, but it will affect two things: download size and maintainability. Your download size will be smaller by a few bytes and it will make the CSS harder to maintain if you want to make changes.