#!/usr/bin/env python

import errno
import os

to_keep_private = [

By convention, global constants are in ALL_CAPS in python

    'cifs-credentials',
    'config',
    'fetchmailrc',
    'gitconfig',
    'gnupg',
    'mpoprc',
    'msmtprc',
    'mutt',
    'netrc',
    'offlineimaprc',
    'pim',
    'purple',
    'quodlibet',
    'ssh',
    ]

to_ignore = [
    '.',
    '.git',
    '.gitignore',
    'linkify',
]


def make_private(files=[]):

Generally, its dangerous to have mutable objects as defaults. They don't behave like we might expect.

    if len(files) == 0:
        files = os.listdir('.')

I'd expect an empty list of files to do nothing, not operate on the current directory. For this sort of case, its more usual to use None. Have None be the default and check for that.

    else:
        # Use the list of files passed by the user, if it is not empty
        pass

uhh.... this has no effect.

    for filename in files:
        if os.path.isdir(filename):
            os.chmod(filename, 0700)
        else:
            os.chmod(filename, 0600)


def linkify(files=[]):
    if len(files) == 0:
        files = os.listdir('.')
    else:
        # Use the list of files passed by the user, if it is not empty
        pass

Again. Don't do this.

    os.chdir(os.path.join(os.environ['HOME'], '.dotfiles'))

I avoid changing the current directory. It gives the function unintended semantics. For example all your os.listdir calls will return different results after this. Instead, use absolute paths.

    for source in files:
        if source not in to_ignore:
            target = os.path.join('..', '.' + source)
            source = os.path.join('.dotfiles', source)
            try:
                os.unlink(target)
            except OSError, e:
                if e.errno == errno.ENOENT:
                    pass
                elif e.errno == errno.EISDIR:
                    print("%s is a directory. Ignoring." % target)
                else:
                    print errno.errorcode[e.errno]

Do you really want to try carrying on after an unknown error code?

            finally:
                os.symlink(source, target)


def add_hook():
    f = open('.git/hooks/post-commit', 'w')
    f.write('#!/bin/sh\ngit push\n')
    f.close()

avoid one letter variable names. They make code harder to follow. Also you should use with

 with open('.git/hooks/post-commit', 'w') as hook:
     hook.write('#1/bin/sh\ngitush\n')

This will take of closing files even in the face of an exception.

    os.chmod('.git/hooks/post-commit', 0755)


def parse_cli():
    import optparse

Usually better to import everything at the top of the file, not in functions

    parser = optparse.OptionParser()

    parser.add_option('-H',
                      '--install-hook',
                      help='Install git hook for automatic push.',
                      action='store_true',
                      default=False)
    parser.add_option('-n',
                      '--no-linkify',
                      help='Disable creation of symlinks',
                      action='store_true',
                      default=False)
    parser.add_option('-P',
                      '--no-fix-perms',
                      help='Disable fix of permission for private files.',
                      action='store_true',
                      default=False)

    return parser.parse_args()

This is the bit where you actually interpreting the command line. I'd do the os.listdir() here as to my mind, its part of the command line interpretation.

if __name__ == '__main__':
    opts, args = parse_cli()

I'd call args: filenames to get a better idea of what's going on

    if not opts.no_linkify:
        linkify(args)
    if not opts.no_fix_perms:
        make_private(args)
    if opts.install_hook:
        add_hook()

Issues of else:

The original has the following code:

    if len(files) == 0:
        files = os.listdir('.')
    else:
        # Use the list of files passed by the user, if it is not empty
        pass

and I said this was a bad idea because the else did nothing. You've asked for clarification on this point. I think you put the else block in there to make it more explicit what you are doing, that way you have clearly delinated the two cases. I'd say if you want it to be explicit, make it explicit via code not comments

if len(files_) == 0:
    files = os.listdir(.)
else:
    files = files_

I think this is better because the code conveys the message, rather then inline english text.

However, I'm not sure that much is gained for explicitness here. If I see:

if len(files) == 0:
   files == os.listdir('.')

I can see that its implementing the logic for a default parameter, because that's a pretty common practice. I don't see that you gain much by making it more explict what the other case is. The other case is pretty obvious.