Google Issues Stern Warning to Affiliate Sites

[PhoneMistress]

I asked this question under Search Engines. Are LLs considered link farms as per the Google definition of link schemes? When I initially saw the Google warning regarding affiliate links and their criteria to base this on as "thin" information, I wondered about LLs. Now, I am on their webmaster forum looking to see what if any penalty my site has and the first accusation out of the box is that I have a "major link farm".

Also, does anyone have a link or know the context of when Matt Cutts stated a few months back that Google will start focusing on porn sites? In my research I picked up on that bit of information from several webmaster forums and can't seem to find exactly when that statement was made.