TheOptimizationIdiot - 10:42 am on Mar 6, 2013 (gmt 0)
Actually JohnMu was quoted here in late 2012 as saying 404s show your server is functioning properly.
The only way 404s actually hurt is if you link to them.
The info I cited is still applicable.
404s don't hurt.
Links to 404s can.
I had someone ask me to fix all the 404s on their site, because they thought they were causing a Panda/ranking issue, but there's not a Panda or ranking issue any more and there's still tons of 404s, because it's a waste of my time to do anything with them.
They were totally convinced like so many people here 404s caused issues. It wasn't until after the site was fully indexed and ranking again without one of 404s fixed they "got" that 404s really aren't an issue.
BTW: If they really were an issue I could put up a million or so random broken links to any site I wanted to tank and pull them down and do it again a week later to more random non-existent pages and there's no way anyone could keep up with "fixing them". (I might be "the average idiot", but I not completely stupid so there's no way I'd do it cause it would hurt my site, not yours or anyone else's.)
It seems like it might be a good idea to stop reading between the lines, go with what's been repeatedly publicly stated about 404s since at least 2008 and start looking in other places for issues, but that's totally up to you.