SteveWh - 6:01 am on Jun 28, 2010 (gmt 0)
The question is why did that other site(s) create all those wrong links. It might not have been an accident.
Make sure there is not a hidden website embedded within your site, that is serving up content, or a 404 page with a link to content (such as pages selling drugs), in response to the 404's that are caused by someone following those bad links.
In other words, if someone placed lots of links around saying that your site has pages selling drugs, it is possible that your site is indeed serving pages like that, which are served only under specific circumstances.
One way to check is to go to those pages and follow the links to your site. If you do that, use high browser and PC security while you do it.