Take a look at this fellow. His rep graph shows he should have around 800, but his score is 1. There is no penalty box message on his account, either. The rep graph also shows no major negative activity like -100 for flagged posts. What's going on here?
My first revision about flagged posts not showing in the reputation was wrong, but if I delete this then the useful comment by Bill the Lizard might be lost? I'll just repeat what Bill commented then:
He lost his rep due to a bunch of posts being flagged. See this discussion. Those should show up in his reputation graph, though.
This culminated in a discussion revolving around this specific user, which he actually came and participated in, fairly amicably I think.
He actually did get flagged to death, but I think the flagged posts were deleted and just aren't showing up in his history or reputation graph (and he hasn't gotten a recalc). Either that or he was penalized by mods but subsequently forgiven.
This chap posted answers to various questions on .Net and email. All of these answers included a link to his web site where he sells a .Net email library. Often he posted these answers to quite old threads, in a way which looked like a marketing campaign.
Basically a whole bunch of his answers appeared on the Tools Flag page as spam (a couple of them are still there). A whole number got the necessary six votes to incur the 100 point penalty.