Wilburforce - 7:02 pm on May 27, 2012 (gmt 0)
I'm finding that it's taking a month or more for sitewide link removals to get discovered
I removed _all_ external links very early on (all pages now spidered and cached). Removing them restored a few pages that had clearly been penalised, in one instance to the extent that an exact phrase in inverted commas that yielded only three results - my page and two scrapers - put my page behind the scrapers, and put it nowhere in the top 100 for any relevant search. It is now back on first page for normal search terms. External links therefore obviously have an effect.
However, backlinks are a more tricky issue. I have a mass of backlinks from a suspect site (all using the main money term as anchor text, and linking only to the money term section of the site), which I think are the reason my home page has gone from top of page 1 to bottom of page 4 for the money term. I didn't place the links, and it looks strongly like negative SEO that has paid off.
I have registered with the offending site and blocked my pages (and all the backlinks have now gone), but WMT has only refreshed the backlink data a couple of times in several weeks, bringing a count of several thousand down by a hundred or so each time. If I am being penalised (for what, in fairness ARE unnatural links), the penalty won't lift until Google has revisited thousands of pages it has already classed as junk.
Note I have not received any warnings in WMT, probably because it isn't bad enough for exclusion, merely enough to drop a few pages (which is much the same in terms of new clients).