Basically, I'm just wondering if search engines will read the PHP includes I'm using. I'm putting all the navigation into this format (and some other keywords in the sidebars) so it is very important that the search engines be able to read it. I assume they can, but I want to be 100% before I commit to doing this across my site.
PHP includes are transparent to all end users regardless of whether they're search engines or people. You can consider a file comprised of many PHP includes to be identical to a file which has all the same content already in it without the inclusions. You might make the files differently, but to the end user, it's all the same.