Should every link on my site be nofollow? I'm not sure if I should do it for links which are redirects to product sites, or if I should include "faq, contact, etc."? I know google likes those fluff pages, but does it matter if I do nofollow links to them as in better or worse?
for internal pages, add nofollow to links/pages that you dont want googlebot to follow. most of the internal links will be dofollow anyways. no reason to add nofollow to contact or faq pages as they are part of your site. you can add nofollow to all external links if you want
You can put nofollow on links that do not represent you, links between pages and the rest have no job with that.
If you have a privacy policy page, contact form page, or Terms of Service page you could nofollow those.
Adding nofollow to links doesn't help your page from an SEO perspective anymore at Google. They changed the way PR is calculated about a year ago so that PR sculpting using nofollow is now defunct. In the past you could nofollow links on a page so that the remaining followed links got more juice. But that is no longer the case. So it's really worthless to use nofollow for ANY internal links anymore. You're better off leaving ALL internal links followed so that the juice can flow to those pages (even legalese, contact us, about us, etc.) and back out from those pages to the rest of your site. If you nofollow them then that PR that would have gone to those pages gets wasted... goes into a black hole... it does NOT get redistributed across the remaining followed links anymore. Matt Cutts explained the changes well here... Pay special attention to the paragraph JUST before the first question/answer. If you don't want a particular page to show in the SERPs then flag the page with <meta name="robots" content="noindex">. Using nofollow to prevent a page from showing in the SERPs is worthless. Google can still show your page in the SERPs even if every link on your site pointing to the page is NOFOLLOWed. Actually, Google can even show your page in the SERPs if you block the page w/ robots.txt disallow if other sites are linking to it and Google thinks, based on the link text used on those inbound links, that the page is relevant. The ONLY way to insure that the page does not show in the SERPs is <meta name="robots" content="noindex">. NOFOLLOW is now only useful at Google for what it was originally designed for... Use nofollow when you're linking to another site that you don't 110% trust. If you link to a site with a followed link that turns out to get penalized by Google for violating their guidelines, your site can be penalized as well for promoting a "bad neighborhood" site. This is why most blogs have comments flagged w/ nofollow. They don't want spammers getting them in trouble with Google by dropping links to bad neighborhoods.