Googles reps at Webmasterworld conferene in Vegas Nov 2005 denied any such notion of a “sandbox”.
But, anyone who does SEO knows there is a filter in place and I think this filter is a pain in the ass for everyone and punishes both good sites and bad alike.
Some rogue webmasters have been able to trick the filter and generally speaking the good webmasters can’t or won’t beat it.
It seems to depend and apply to 2 major areas and only for somewhat competitive keyphrases:
1) Age of site
2) New backlinks to sites
So, if you have an older site and then go out and gather links too quickly, the site will be held in a filter (sandbox) for awhile before the value of these links is applied and your real ranking shows.
I have seen some sites being held out of the serps for well over a year and no sites of mine newer than fall 2004 are anywhere to be found in Google but are doing fine elsewhere.
This is an oversimplified generalization and there are always exceptions, but it seems to me that this is fairly accurate.
My opinion, Google sucks…lol