tangor - 10:38 pm on Jan 3, 2012 (gmt 0)
Also, the one bad outgoing link that I found was a site selling software designed to create fake content and links to fool google...could that one link cause a penalty?
Given the tens of thousands of apps offering to do the same, and the existence of only one... that's not very likely a trigger.
This is a Google forum but it helps when troubleshooting to check other search engines to see where your site is located. If you're also doing poorly in Bing or Yandex, etc... then it's quite likely there's something in your site that needs to be addressed.