For every website that I host on linode, I create a master zone and create a separate folder for the website in public

public --> site1
public --> site 2
public --> site 3

In terms of SEO and google I assume (correct me if I am wrong) that its not a good way since all websites follow same IP address, its like a shared host.

What I want is to keep one client viewed in terms of SEO as a separate entity and not related to other websites hosted on same server.

Also this client is involved into medicine business (appears very much legitimate but I am not 100 percent sure if he might be sending spam via other sources mentioning his website link) I am not hosting emails just postfix to handle automatic emails sent via php scripts. Will it affect other websites on same server in any way ? What would be a good way to tackle this in terms of SEO and having the web know that site 1 in no way is related to site 2, site 3 etc.

Two or three sites on the same IP address aren't going to have much negative impact on SEO with Google. It's rather when you range into the area of hundreds or thousands of websites on the same IP where all of them are linking to each other you'll get into SEO trouble.

The SEO myth of having a dedicated IP address for each website/domain was dispelled by Google's own people a long time ago, but I noticed that a Google search on the topic spews out several "SEO expert" articles that keep this myth alive. Feel free to read this article:
http://news.namesonic.com/google-dispel ... icated-ip/

Besides, the desire to keep one website per IP address is not a good enough justification for adding more than one additional IP address to your Linode.

Thanks a ton NeonNero really appreciate it.