ChicagoFan67 - 2:33 am on Jan 11, 2009 (gmt 0)

looked at Google webmaster tools and noticed that Google had taken away nearly 1000 links from the site (in the external links section). Would this effect the position?

It may. I had the reverse happen. I was baffled by the poor ranking of a couple of my pages for several months. These pages also, were not listed in either the internal or external links section of GWT despite having a reasonable number of both. One day, I was surprised to see a substantial rankings improvement for these pages and when I checked GWT, the external links had been updated to include these pages.

Why would Google strip links or ignore them?

I noticed many of the pages containing external links to mine had grey toolbar PR.