It is, of course, essential to be brutally honest in filling out the SF86. The information presented in the SF86 will be given to experienced investigators, and the investigation process will be managed by an even more-experienced investigator. Any false information discovered on the SF86 will almost surely result in denial of a clearance, and possibly even criminal prosecution.
Some individuals think that they can guarantee approval by listing only information that puts them in a good light, and overlooking or omitting derogatory information. While this is common practice (and perhaps generally accepted) on a resume, do not do this on the SF86. As noted above, those investigating your background for a federal security clearance really know how to conduct an investigation. This may include FBI agents, military investigators (from the Air Force Office of Special Investigations, Army Criminal Investigation Command, Defense Security Service, Naval Criminal Investigative Service, or others), contract investigators, or others with extensive investigation experience.
These people will talk to everybody they can find about you. This includes not only the references that you list (and it is important to list references who will say the best things about you), but also the neighbors, former employers, classmates, etc., that you haven't listed. They might even ask your references for references, and then talk to those people about you. Thus, it is important to make sure that everyone who knows you feels that you are trustworthy -- if you know someone who will say that you're not, be prepared to explain it to the investigator during your personal interview.
The ultimate point of the background investigation is to determine whether or not you can be trusted with national security information. This is an extremely important task, and those fulfilling it take it very seriously. Look back at your history and ask yourself, "Based on this, would I trust this person with codes to nuclear weapons?" If your answer is anything other than, "Certainly!", then you should improve your history. You can't hide your past, but you can put a better face on it.