The true hallmark of terrible fanfiction is when the author inserts themselves into the story. Oh sure, there are plenty of ways for fanfics to be horrible in other ways, but the self-insert is a sure-fire way to make any sane person cringe.
For me, the most cringe inducing examples I've personally seen (and no I don't remember who wrote these, go find them yourselves if you absolutely have to read these paragons of literature) Is a fic about Ed,Edd,n Eddy. I have NO idea why this cartoon gets so much fanfiction. I mean it was a funny cartoon, but the devotion to these characters is beyond me.
Anyway, the fic in question features a grown up (by grown up I mean 16 year old Eddy) who is dating Nazz, but in this story he goes on a camping trip and lo and behold, he meets a girl from his past who he totally had the hots for and now she is drop dead sexy and even has tattoos. [*SIREN NOISE BLARING* ALERT! ALERT! INCOMING SELF-INSERTION AUTHOR CHARACTER!] And, you guessed it, the two have sex that night in her tent. And of course, the story does everything it can to justify Eddy cheating on his girlfriend with this girl (*cough* author) so as not to make him unsympathetic
The second example I remember is about Duran Duran. Yes...the band...from the 80's. Well in this fic, the band is super famous, yet they can still hang around town without being mobbed by fans or paparazzi. I forget the city they were in, but that's not important. Anyway, the band is also inexplicably BFFs with this girl who is...a nobody. She's got nothing going on in her life except "I'm friends with Duran Duran". Guess who? Could it be the Author? Anyway, the fic deals with the fact that ALL OF THE BAND MEMBERS have homosexual fantasies and explore it by having sex with each other. Yeah... Oh, but wouldn't ya know it? Lead singer Simon Le Bon, despite only seeming to think about gay sex, decides one night that he wants to have sex with a woman (nevermind that he's married in real life. Such details are not important!) and not just any woman. No, the only woman he wants is....the Author--I mean best friend.
Yeah...maybe this is just a gross generalization, but in my opinion, ANY fanfic that focuses on sex, is shit. I am willing to concede there might be a fanfic out there that is a really well written story and maybe there's like one sex scene in there that is done tastefully and actually doesn't detract from the plot. But I sure as shit haven't seen it