Search Engine Journal did an interview with a gentleman who used to work for the Google Webspam team that is run by Matt Cutts.
The interview gives a pretty good look into what Google considers spam, how to fix your site if its been demoted by Google, and what things to avoid.
The question and answer most interesting to me from the article was:
7. What are some of the biggest misconceptions or myths
you’ve seen about “bad links” and link profile penalties in the SEO
I think I could write a book about this topic! SEO is an unprotected
title and anyone can call him or herself one. The result of this is that
there are almost as many opinions as there are SEOs. Some of the
biggest misconceptions that I have seen out there include; “directories
are altogether bad” or “anything that is below a certain PR is
considered spammy by Google”, I see a lot of people panicking and
cutting off the head to cure the headache due to lack of knowledge. The
most dangerous one of all I would consider to be the opinion that if an
automated link building scheme is expensive, it must be good. Google has
made it very clear that it wants links to be a sign of a real reason to
link, an AUTHENTIC vote of confidence if you will. Anything that is
paid for, is not considered quality by Google and participating in it
puts your site at risk!