I have seen a few of my competitors using this and it seems to be doing well for them. Has anyone had any experience with this and will my site get banned as some people think. Alos the competitors that are using it seem not to be advertising the ads on their pages. Is this because they use another site to do this and then specify the URL to their main site
No, your site won't get banned. If your competitors are using it, then you should to. Co-op goes like this: The more indexed pages, age of site, and traffic that your site receives, the more weight you'll have and the more backlinks you'll end up receiving.
How to use Digital Point Co-op Advertising Network for our benefit? Where can I find the required information?
http://www.digitalpoint.com/tools/ad-network/ http://www.digitalpoint.com/tools/ad-network/faq.html It's all there.