SEO Penalties come in many forms

• Low Quality Score
• Relagation to the supplemantary index
• Blacklisted

First of all, lets cover some basics. SEO penalties exist because search engines needed a way to stop people trying to cheat the system. So if you cannot cheat the system what can you do. Well between white and black, there are many shades of grey. Many people going around there everyday business on the internet, cross the lines with no intent to cheat their way up the search engine charts. For example consider the following Monty Python Lyrics
Spam Spam Spam Spam Spammity Spam
This lyric could be  interpreted as keyword stuffing, however you are unlikely be blacklisted for this. It may well however lower your quality score.
Duplicate content is something search engines particularly dislike. The reason being that returning the same answer ten times on the first page, with each answer coming from a different site would not be good, and you may note does not happen. If several sites have the same content, one of those sites will winout and the others will be filtered out to avoid duplicate results.
Moving or disappearing content is also something not well liked by search engines. Considering the fluid nature of the internet, it is not often that search engines send people to none existant pages. In order to avoid doing this, sites with moving or disappearing content have much lower quality scores than established sites with stable content. In it search for new content, these established sites are far much trusted as locations for the latest information.
Push your search tactics too far and before you know it you will be seriously penalised or even blacklisted. Most hated by the engines are link farms. If you think you are going to be clever by submitting your site to automated submission engines, think twice. Before you know it, you could be paying a very high price.
So how do you conduct SEO without crossing the line. In a nutshell, you need to mimc the natural evolution of a popular site, and promote your site in all the ways a popular site would. As ever there is no such thing as a free lunch.