Planet13 - 2:24 pm on May 18, 2011 (gmt 0)
I'm not ruling out links as the issue but you can't hurt a site by simply pointing links at it right?
I don't have an answer for you, but I believe some of the moderators on this forum thread have said that, yes, you CAN hurt your site by pointing too many links at it. I tend to believe them.
If it isn't too many links, then seriously, what could it be?
Did your content change significantly?
Did you just add a huge number of pages of content?
Did your CMS / structure change significantly?
Are you being scraped?
Have you been hacked?
Are page load times longer than before?
Are there lots of user reviews out there saying your product / service is terrible?
The only consolation I can see is that your site is bouncing around in the SERPs. From what I have read, an Over Optimization Penalty / Link Spam penalty would, in the past, knock you down a consistent number of spaces, and you wouldn't see any movement for a designated time (like, exactly 3 months, or exactly 9 months, or whatever).
I don't know if this has changed for OOPs or not. I would definitely search the forums for recent posts on OOP and see what others are saying.
Maybe all those links you built have simply been devalued and google is just trying to figure out where you would rank without the link juice from them based on your content alone?
Anyway, keep us posted.