I need to plot BER as a function of received power to find power penalty. Is there any range for power that is to be plotted in order to find power penalty?
I suggest that you use sweep mode for a wide range of power change (say 30dB). Then you can choose a smaller range which gives results of more interest. It really depends on your system.
The power penalty depends on many factors (bitrate, modulation type…) so it depends on your system. If for example you have a simple tx -> fiber -> receiver system, you can simply add a VOA in front of the receiver and the change its attenuation from 0dB to xx dB to see how BER changes.
Why in some cases BER is plotted against received power while log of BER is plotted against received power in other cases? Is there any relation between the two plots ?
Almost all cases I can remember now have used the log of BER, even though it might also be shown otherwise as you have mentioned. Using log of BER, the changes in a rather small interval (say from zero to one, the BER range) as well as changes in a wide range can be shown better and more clearly.