One question. How do you know you have been penalized?

You'll soon know, your site won't show up in the serps. A directory shouldn't need search engines but if does, then it will never break away or be much.
Common sense really.

sadly too many sell links based on pagerank, and make problems for themselves. google sees this and penalises them. Probably why they have empty directories.

Always a reason for a problem and is usually self-inflicted IMO

Hey guys, i was going thru a site and i found some answers given by Matt Cutts, if you know him.

Q: Hey, as long as we’re talking about directories, can you talk about the role of directories, some of whom charge for a reviewer to evaluate them?

A: I’ll try to give a few rules of thumb to think about when looking at a directory. When considering submitting to a directory, I’d ask questions like:
- Does the directory reject urls? If every url passes a review, the directory gets closer to just a list of links or a free-for-all link site.
- What is the quality of urls in the directory? Suppose a site rejects 25% of submissions, but the urls that are accepted/listed are still quite low-quality or spammy. That doesn’t speak well to the quality of
the directory.
- If there is a fee, what’s the purpose of the fee? For a high-quality directory, the fee is primarily for the time/effort for someone to do a genuine evaluation of a url or site.
_
Those are a few factors I’d consider. If you put on your user hat and ask “Does this seem like a high-quality directory to me?” you can usually get a pretty good sense as well, or ask a few friends for their take on a particular directory.”