I have made a quick reference for Google penalty checklist. The following things should be avoided - [*]Hidden text or links [*]Automated query penalty [*]Linking to bad neighbourhoods [*]Linking to banned sites [*]Over optimization penalties [*]Website cross linking & link schemes [*]Keyword stuffing (spamming) [*]Link buying or selling [*]Automated page redirects [*]Reciprocal link building campaigns [*]"Made for Adsense" AND Thin Affiliates sites For compliance you can check Google Webmaster Guidelines and also make a habit of using Google Webmaster Tools
Thanks for the list. It's always important to just follow the basic rules. I'm just curious why Link buying or selling would get you penalized. That's the whole concept of sponsors which they provide that service.
marlonpowell, thanks for sharing this info.great and useful The Actual Reason Why My Page Rank(PR) Went Down