How can I tell if bell peppers have gone bad?
Here are a few things to be wary of when buying peppers:


Wrinkled skin -- it's a sign that they're drying out.  It should be firm and smooth.
Soft areas -- it's a sign that it's starting to rot in areas.  It should be firm all over.
Fuzz near the stem or blossom end -- you can't always see outward signs of the fuzzy mold, but if you do, it'll be right around where the stem attaches, or in the crevice on the other side.
Cracks -- it's a sign that someone's dropped it, and opens up the possibility of rotting faster
Spots -- besides the soft areas, you can get small dots in an area ... it's a sign of disease.  (I'm not sure which; I typically get this when growing my own, don't see it in the store).
Holes -- a sign that there's an insect that's eaten its way inside.  (again, I see this more on home grown ones)


Things that aren't always a problem:


Discoloration : if it's a green pepper, it might start turning red, yellow or orange.  Red peppers might have an area that looks black or brown.  So long as that area isn't soft, and the color changes look blended in (not where it's an obvious line between colors), it's fine.
Weight : you typically want heavier specimens, but some varieties are thinner skinned, and won't be as heavy.  If you find one that seems abnormally light, compare it to similar sized ones in the display.  If they're all the same, and don't have wrinkled skin, they're probably okay.
White lines : you typically see this more on hot peppers, but it can happen on bell peppers, too.  They'll be roughly parallel to each other, along the line from stem to blossom.  It's a sign that they got a sudden burst of water while growing, which caused the skin to crack (but then heal).
Folds : some varieties of peppers are more balloon-like, while others may have a few folds; so long as it's still smooth skin (not wrinkled), relatively heavy for its size, and you don't see fuzz in the folds, it's not an issue.