Comment on Squirrly WordPress SEO Review by SEO Dave.
When Google first adopted rel=”nofollow” it made perfect sense to nofollow not only links you don’t endorse, but to use nofollow to sculpt PageRank flow through a website.
When a lot of webmasters used rel=”nofollow” on the unimportant internal webpages it pushed more PR to the important webpages.
Google wasn’t happy with this, so in 2008/2009 they changed the way nofollow protect PR, see Matt Cutts Nofollow Deletes PR Quote. Now nofollow doesn’t conserve the PR for use on the dofollow links, it deletes it AKA Nofollow Links Causes SEO Damage.
See the images at http://moz.com/blog/google-says-yes-you-can-still-sculpt-pagerank-no-you-cant-do-it-with-nofollow if you don’t understand the issue:
Linking to authority sites works because of the anchor text of the link, not because you’ve forced your way into an authority circle. No authority site links back, so you only benefit from having related anchor text linking out, you can achieve the same linking internally: note the four internal keyword rich link in this comment.