How damaging is it to have been a co-author of a retracted paper? Many years ago, when I was very new to the world of scientific paper publishing, I was a co-author to a paper that was subsequently retracted after an investigation of the findings. This was before I did my PhD (was a Master's student in a different field that I am currently in).

To explain, my role in the data collection and analysis was quite specific, and in the investigation it was deemed that my part of the work was verifiable and sound. In hindsight, I have long realised that I should have taken on a more active role in proof-reading the article as a whole, cross checking the findings and being more active in the article writing process. For that, I have always taken responsibility - so, even though I do not have anything to do with the lead author anymore - I am not blaming anyone.

Since then, I have been co-author and first author of over a dozen more papers - many are published without difficulty (we check, cross-check and check everything again nowadays).

But, the question remains, in terms of applying for postdocs, funding, grants and the like - how damaging is it to have been a co-author of a retracted paper?
The effect of retractions on scientific careers has been studied, and the conclusion is essentially that retractions don't hurt scientists who are behaving carefully and ethically.

For your case, it sounds like you were clearly exonerated, and that your only fault was being a junior researcher who wasn't proactive about ensuring honesty on the part of your collaborators.  Since you've since gone on to be more fully educated as a researcher and to establish a good publication record, I would not expect that this past retraction is likely to have any significant effect on your current prospects.