I have a client who has a bit of code on the footer of my site that randomy generates 5 URLs to different websites. Could my site be penalised because of this?
Are these urls pointing to legit sites? If so, they should be fine. If they point to spammy sites, that may cause some trouble, but not enough to be worried about. If these urls have nothing to do with the topic of the site, it is not a good practice to have them anyway. They won't hurt your rankings, but they won't help either.
if a crawler find frequently change in a specific location where links are placed, it may treat them differently. I feel you must stay away with dynamic link rotator, it may hurt.
from the google webmaster guidelines : avoid links to web spammers or "bad neighborhoods" on the web, as your own ranking may be affected adversely by those links.
Well apparently Google don't like paid links that are designed to have PR benefit for the buyers. And Matt Cutts has recently request people report these types of links. I've removed all the advertisements and will only re-instate them with rel="nofollow".
I don't think your site will get penalised. But it the 5 links change I don't think is there any value for the linked sites. Google pays a lot of attention to the age of the link in order to value it, so if it is not there the next times the Bot spiders the site it won't give any value to those links.