What's changed with nofollow?
I got a question in an older blog post today asking "What's the change that Google has brought in with nofollow?" And I thought I'd clarify it a little.
Back in 2005, Google announced that when a link has a nofollow attribute on it (rel="nofollow") "those links won't get any credit when we rank websites in our search results."
Then in June of 2009, Google implied that the use of nofollow on links was not being as severely penalized as before. According to SearchEngineWatch.com: "Basically, using nofollow will still prevent PageRank from passing from the linking page through the nofollowed link. But that PageRank is no longer "saved" to be used by other links on the page. It just "evaporates," according to Cutts."
Ultimately, it means that while links marked with rel="nofollow" won't get a PageRank bonus from Google, they might still follow the links and the negative impact of the nofollow is lessened.

That’s crazy. I’ll bet a lot of people are scrambling now to try and make up for lost SEO
Google will acknowledge the link without passing page rank to it. However, this isn’t an invitation for a free for all linking campaign. They have adjusted other elements of their algorithm to continue to penalize irrelevant and / or untrustworthy links.
Many sites used internal nofollow to pool page rank to important pages. Google have now publicly stated that this doesn’t work, as less page rank is spread around the remaining followed links.
Google have not changed their policy for external nofollow. A nofollow external link is still given no credit whilst it dilutes the page rank left to flow around the remaining followed links.
Well this probably means using instead “external nofollow”, for the comment posts and untrusted links.