When a man is jealous of another man because of the size of his penis. Usually a girl is involved, she might choose one man over another, and the other man comes down with penis envy.
A penis that has been tied into a knot which may or may not include the scrotum. Also used when describing a person who is similarly mixed up and causing some form of annoyance.
Damn it Matthew you penis wad, this is the third time this week you messed up the money.