Disavow Tool and Penguin

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http://moz.com/blog/google-disavow-tool

This article covers an experiment and research into how Google’s Disavow Tool works.  The author disavowed all links to his site in order to see what affect it would have.  Initially there was no change until the Penguin update was released.  Based on this and information from other SEOs they came to the conclusion that the Disavow Tool takes affect either when a reconsideration request is filed or when there is a data refresh.

The article suggests that disavow can be used to help recover from Penguin 2.0 but it should not be the first option.  Disavowing can have negative consequences so it is important to try other routes first.  Identifying and removing as many bad links as possible should be done before attempting to disavow links.  If that does not get results disavow can be looked at as an option.  It is also important to document the link information for all links that are being submitted to disavow and make sure that everything is formatted correctly.  The article has step by step instructions for dealing with bad links.

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