Clearing up link spam - What to do?

So I recently messed up one of my sites. Rankings fell considerably and I couldn't figure out why - until now..

I had created a subdomain forums.example.com as an experiment into creating a community forum around the site. I was using vanilla forum software (http://vanillaforums.org/) as it seemed like a great alternative to vbulletin etc. However, other things got in the way and I never finished the set up and left it alone for a while. Fast forward a few months and my rankings are dropping considerably and I'm losing number 1 long tail positions I've had for years, at first I had know idea why and put it down to an algo update.

But by luck I looked at the backlinks to the entire root domain rather than just www. and found thousands of shitty links with Polish payday loans etc anchors all pointing to pages on the forums.example.com subdomain.

What I have done is delete the entire subdomains files and directories, by mistake 301'd all urls to my main domain although they are now 403 or 500 errors.

How should I approach the link cleanup? I'm 99% sure these links are the cause of the rank drops. Should I disavow all the links pointing to the forums subdomain? Should I claim the forums.example.com domain in webmaster tools to see what links Google is showing and only disavow those?

Help very much appreciated!

Ben,

I think your first step it to try and figure out how these links were created. Once you figure that out, try to get them taken down. Keep in mind that this is the best method for cleaning up bad links. Naturally it isn't always practical or possible to remove links so then you can consider disavowing them. Also keep in mind that you should document everything that you have tried to do in an effort to clean up the bad links. If you just send google a file and say "here, ignore these", they won't do it. You have to show them that you tried to get the links removed and for whatever reason could not.

Here is a pretty good post on how to submit a disavow links request,

http://searchenginewatch.com/article/2273639/How-to-Use-Googles-Disavow-Links-Tool-the-Right-Way

Hope that helps,
Shawn

Thanks, I had just read that article in fact. Trouble is they are generally automated spam links.

With the subdomain, as I have no use for it, what would the best way to handle it be?

410 error the entire directory? 404 the entire directory? Disallow everything in robots.txt?

Just delete the entire directory but the problem is that the links still exist according to Google.

Did you receive an unnatural link warning?

You can use Google Disavow tools.
It works very effective to remove Bad Links

If the links are leading to 404 pages, you've got nothing to worry about. However, if they link to existing pages, you will have to disavow them. Get yourself an ahrefs/majesticseo account and download a report of all your backlinks. Then start sorting and taking out the domains you don't like. Once you have a list, look up creating a list for the disavow tool and upload them.