2. The word cannot be properly understood as referring to the sacrament of penance, i.e. confession and satisfaction, as administered by the clergy.
In Luther's time, and to some degree it still happens today in the Roman Church, that the sacrament of penance is practiced. In the 1500's, when one went to confession, the priest would absolve you of your sins (something only Christ can do) and demand penance; an outward act such as saying 10 Hail Mary's, feeding the poor, and Luther's favourite, buy your way out of trouble by putting money in the church coffers. It was much like a trade. The Church will forgive you (according to the Roman church, it's the church that dispenses grace, not God) if you confess and then do some outward acts that show how sorry they are (as demanded by the church).
The church was extremely corrupt in the times of Luther, and he saw the corruption from the inside as a priest. The hypocrisy drove him mad at times. Men would be able to buy their way into high-level positions in the church instead of being qualified according to the bible. Magnificent cathedrals were built on the backs of selling 'indulgences' for loved ones that are stuck in purgatory. This is another type of penance, which is not only NOT biblical, but was a burden on the people, keeping them in the poor house while extracting money from guilt and worry over loved ones that have passed.
Repentance has everything to do with sorrow over our sins, but not feeling the guilt of failure, but basking in the grace of Christ, and pointing others in the same direction.
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