I don't like all this nofollow, dofollow, disavow etc.
I'm going to not bother with all that and see what happens. Currently I'm about to do an A/B test with internal site structure / have a look at my internal links and see if I can improve the usability of my website and see if that changes my rank. I will certainly not use that disavow tool.
I am wondering about one thing; I ask local firms to add our link, button or banner to their website to show their customers that they are affiliated with us, we get maybe a link or two a day. Is that possibly the reason why we lost out to penguin? It's really small businesses with not much traffic usually and sometimes they have their website using free services.
My gut is telling me this should be ok as how else are we meant to promote ourselves but all this with penguin has confused me to say the least.