Yes it does affect, there are many myths about different %'s being better but im preety sure its, "the more the better".

The monster decides what item it will drop when u kill it. The server then does a quick calculation to decide what quality the item will be, this incorporates, your character level (clvl), the monsters level (ML), the monsters treasure class (TC) and the ammount of MF you have. The more MF you have the better chance you have of getting a magic item, or in our case a unique item ^ ^