The England defender faced a three-match ban after he was dismissed after a clash with the Bolton striker, Nathan Blake, in Saturday's game at the Reebok Stadium.
Durkin, who said initially that he did not need to study a video of the incident, relented after watching the pictures and ruled that Pallister should only have had a yellow card for "adopting an aggressive attitude".
Blake caught the back of Pallister's leg after the ball had gone and the pair squared up to each other twice. But Pallister kept his arms by his side as Blake struck him and was disgusted when Durkin produced the red card, the first time he had been sent off in his eight years at Old Trafford.
The United manager Alex Ferguson, enraged by the decision, sent a video of the incident to the Football Association. But before the tape arrived at Lancaster Gate, Durkin decided that he had made a mistake and should not have sent Pallister off.
Tony Yeboah yesterday ended his troubled time at Leeds United by completed his pounds 1m move to the Bundesliga club, Hamburg.
The Ghanaian's move back to Germany - where he formerly played for Saarbrucken and Eintracht Frankfurt - had been delayed due to tax problems. These have now been solved and Yeboah, 31, has signed a two-year contract at Hamburg, despite late interest from the Turkish side Trabzonspor and Lecce of Italy.
Celtic have learned that they will not receive a fee for their former midfielder, John Collins, who left Parkhead for Monaco last year under the Bosman ruling on a free transfer.
Celtic's managing director, Fergus McCann, argued that, as Monaco is not part of the European Union, its laws on free movement of workers should not apply and that his club should have earned a fee for the Scotland midfielder.
However, yesterday Celtic were told that Fifa, world football's governing body, has rejected their appeal for payment and that their case was not helped by an alleged error by the Scottish Football Association.
In a statement, the club said: "We are surprised and disappointed the appeal to Fifa in this case has been rejected. The rejection is based on the apparent late arrival of the appeal fee from the SFA. We are investigating this key aspect of the matter."
Uefa's decision to ban the Belgian club, Anderlecht, from European competition for a season over alleged bribes paid to referees is illegal and could easily be overturned, a leading Belgian lawyer said yesterday.
"This sanction... is so illegal, a decision so badly patched together that it only depends on Anderlecht to blow up the sanction. Uefa [European football's governing body] does not apply its own rules," Luc Misson, the lawyer who acted for Jean-Marc Bosman, the transfer system rebel, in the European Court of Justice, said.
The Brussels club have admitted paying a "loan" of about pounds 20,000 to the Spanish referee, Guruceta Muro, who was in charge of a 1984 Uefa Cup semi- final tie against Nottingham Forest. Anderlecht will not challenge the one-year ban, though. The club's lawyer, Daniel Spretels, said: "At the moment there is no question of taking Uefa to court."
Manchester City's former midfielder Colin Bell is suing his old club over his sacking during the summer. He was dismissed as joint youth development officer along with Terry Farrell in a Maine Road end-of-season purge which also saw another former player and the club's youth team manager, Neil McNab, relieved of his duties.
Sir Bobby Charlton is set to celebrate his 60th birthday next month by playing for a local amateur team in Manchester. The former Manchester United and England player has agreed to play for the Moss Side-based side Moss Amateurs against Tintwistle Villa on his birthday, 11 October.
Moss Amateurs are a well-respected team in the Manchester area and Sir Bobby made his pledge when he met their manager, Billy Hughes, at a reception last year.