Is there inherent prejudice given to unemployed versus employed ( but looking to move) persons?

Yes, there is an inherent prejudice. Granddad was right, though I don't know if I would say it's quite ten times. The longer you've been unemployed, the more of an issue it's going to be for an employer. This is going to be a subconscious consideration for even the most generous and open-minded employer even if they don't think it is. When the economy is not doing so well (like now) it's much less of a factor but it would be unrealistic and naive to say that it's not something they'll consider.