The following search engine optimization techniques are SPAM.
-automatically generated doorway pages
-cloaking
-keyword stuffing
-hidden text or hidden links
-pages loaded with irrelevant words
-false redirects
-duplicated content on multiple pages
-misspelling of well-known web sites
-unrelated links
-centralized link farms
If you know more points, please specify.

no internal linking of content making indexing difficult.

A - Own your-domain-name-dot-com
B - Host your site on a reliable server

1 - Shorten the title to 55 chars
2 - Add the robots tag
3 - Place the robots.txt in your root on your server
4 - Get rid of the js in the code and put it in an external file
5 - Use css instead of color, size and font tags
5 - Change the link buttons or js links in to text links
6 - Make sure to have a site map page
7 - Make sure you have 404 page
8 - At the bottom of each page use menus as text links
9 - Make sure your page code is not bigger than 100 K
10 - Submit your site to ODP and Yahoo Dir, make sure to select the right cat
11 - Pay special attention to your content
12 - Try to get as much as relevant links you can
13 - Read each search engines guide lines and follow them strictly
14 - Don't spam
15 - Don't use doorway pages
16 - Don't cloak
17 - And pray hard that the big G appreciates all your efforts

Linking to dodgy sites/ banned sites are always looked down upon and are considered as Bad SEO. You can prevent it by not linking to any Bad neighborhood. If you look at the site and you see a huge link list on the side, that is most likely a link farm so you shouldn't link to it.

Don't link to warez, free download mp3, free movie streaming, etc. you should only link out to sites that you feel you would recommend, and that are relevant.

Besides that, you won't be penalized if bad sites link to you because you can't control that.

Very helpful information for me.Thanks for sharing.