Marketing_Guy - 2:30 pm on Nov 1, 2011 (gmt 0)
What you've been seeing today is a new data roll out - it has nothing to do with your penalty. If you only had 60k pages indexed and it jumped to 813k - you should be worried. The 60k is what Google thinks should be in the index - the rest are lower quality / supplemental / near duplicates / whatever you want to call it.
I've been working on loads of sites that have seen the same jump going on - one because I'm working on removing loads of duplicate URLs from the domain (jumped down from 71k to 2k and back up again this afternoon - just normal datacentre bouncing) and another jumped from 100k to 1.4m and back.
The lower / new number is the more accurate one - the rest are junk content. Your problem isn't anything to do with your links directly - it's one of two issues;
1) You have 800k pages of low quality junk and Google has finally gotten round to removing them.
2) You have 800k pages of high quality content but it was propped up with junk links. Google wipes out the links and your site doesn't have enough link equity to get fully indexed.
Chances are it's the first point (a penalty and not just a drop in rankings), because if you had 800k pages of high (or reasonable) quality content your site would probably have evolved a decent enough natural link profile for junk links to not affect it in any significant way.
What are you seeing (company builds links > site gets penalised) is most likely only part of the picture. More likely is you've been slapped for huge amounts of low quality pages that have undoubtedly ranked just fine for quite some time - now they don't.
Without specifics, can you describe how your content breaks down - what are the 800k pages?