"SEO" in this article stands for Search Engine Optimization (e,g., maybe you don't want your warning against some site or person to improve their search engine ranking positions on Google, yahoo, Bing, etc.). Won't prevent search engine bots from indexing your post with that text, but clicking the link won't aid SEO.
The nofollow tag is basically a notice sign for search engines saying “don’t count this.” Per article: "A no follow link is a link that does not count as a point in the page’s favor, does not boost PageRank, and doesn’t help a page’s placement in the SERPs. No follow links get no love. Theirs is a sad and lonely life.". By removing referring site as well, makes it harder to trace back to your own sites.
On booklikes, to insert the nofollow tag, create your link* then edit the HTML (the last edit option on menu line with block quotes, bold, italics,merc. that looks like a less-than-sign greater-than sign) and manually enter it. Add the rel="nofollow" right before the link's closing > .
*Normally, just typing in the link starting with "http://" creates a URL link in a booklikes post. But, if your created link appears in your post as, for example, "http://blog.booklikes.com" instead of http://booklikes.com -- try just adding a space immediately after as a quick fix. Signifies to booklikes the url is finished ( and allows more complicated links with = ? / , etc.). If that doesn't work, highlight link text and click the chainlink icon to insert relevant info (if still nothing working, resort to the HTML editor and manually type in the code).