Wow, so my website really is penalized. (duh!)
I just took a unique phrase (well it used to be unique, now it's on ask.com and reference.com when I serach for it on Google) that's on every page of my 4 year old, 300 page website and on regular Google search my website shows up on the 3rd page.
On the test CSE from flicky, my website shows up for 69 of the 70 results returned except number 1! (Number 1 is a malware/spam site which returns a 404).
It's a small site and I haven't worried too much about the 80% drop in Google traffic since November 2010. Right after it happened I posted on the Google webmaster forum and got no response and sent in 2 reconsideration requests both of which were auto responded. I had nothing to admit, because I still don't know what policy the website was violating.
Since then the website returned to it's pre-November traffic for 2 periods of 4 days, once in January and once in March before shooting back down to 0 traffic from Google.
Well at least I know the website is penalized :-) Any ideas on what to do next?