Someone told me that top category allowed directory will cause Google penalty because Google will think passing PR. Just want to confirm it's true or not? Thanks in advance.
If you thing Google will penalty these sites, then start adding your competing sites to these directories ;-) Hugo
Google will penalize if they have reason to believe you are spamming , selling links(may be) or if you start linking to illegal stuff sites. Other than that google doesn't penalise so easily, it could be that the site serp dropped due to several other reasons. Dropping or PR, serp is not necessarily an indication of a penalty. Incoming links are unlikely to penalise apart from maybe few exceptional cases when prooved that you have been spamming forums, blogs with software and selling illegal stuff.