I've heard that Google wants quality links - and 'quality' would be something like.. related or relevant links. However, on my blog I have two links to two unrelated sites. They are not paid links. They are not related to my blog, but rather they are links that I visit/love (a clothes site and a musicians homepage). Since they are not related to my site, would I, or either of them, receive some kind of penalty from Google? How does Google tell the difference between favorite/recommended links and paid links? I don't want Google thinking they're paid just because they're unrelated.
well, unrelated links won't harm your site that much (or penalized by SEs) nor help your site in terms of ranking
Well I am also with ajsa52, you should keep "No Follow" attribute....So incase it is not relevant Google won't harm your site....or a blog....
Unrelated links won't penalized your site as long as the link is not too much that might look as link farm. But it doesn't also help your site to improved SERP and pass PR juice.