Page is a not externally linkable
tedster - 12:55 am on Aug 7, 2008 (gmt 0)
Maybe if your site has a lot of BAD INTERNAL LINKS, maybe that could hurt you a little bit. And even in that case, it would be the bad links that are hurting you, and not the fact that the server gives an accurate 404 response. Every possible combination of characters except for your actual files is a 404, or at least it should be. If there really were a penalty for "too many 404s", imagine how easy it would be to take out a competitor just by aiming a bunch of bad links at their domain from another domain.
Why would there be a penalty for "a lot of 404s?" Every so often we get a taste of that particular bit of "SEO mythology" here, and I sure wonder where it got started.