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I'm confused about the difference between rel="nofollow" and rel="canonical". I currently use nofollow for any links that I do not want followed (for example rubbish content but small importance) and I use canonical for duplicate content (for example: http://example.com/price.php-sortby=price vs http://example.com/price.php-sortby=alphabetic).

Maybe I'm using these wrong. I need good advice on what's the best way to use nofollow and canonical correctly.

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nofollow is a value that can be assigned to the rel attribute of an HTML a element to instruct some search engines that a hyperlink should not influence the link target's ranking in the search engine's index. It is intended to reduce the effectiveness of certain types of internet advertising because their search algorithm depends heavily on the amount of links to a website when determining which websites should be listed in what order in their search results for any given term.

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Summary: use nofollow to disavow links to pages (typically if you do not have editorial control of the links (i.e. links in blog comments))

URL normalization (or URL canonicalization) is the process by which URLs are modified and standardized in a consistent manner. The goal of the normalization process is to transform a URL into a normalized or canonical URL so it is possible to determine if two syntactically different URLs may be equivalent.

Search engines employ URL normalization in order to assign importance to web pages and to reduce indexing of duplicate pages. Web crawlers perform URL normalization in order to avoid crawling the same resource more than once.

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Summary: use canonical URLs to tell search engines that when two URLs display the same content, which one s the primary URL

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right, good example about nofollow use for links in blog comment !!! –  userkick Aug 16 '13 at 3:02
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