tedster - 1:57 am on Feb 2, 2012 (gmt 0)
Welcome to the forums, auraoflight. Sorry to hear about such a problem, and yes - it does sound like a penalty. The only other possibility I can think of is that you may still have some technical problem going on. Be scrupulous about checking on that - use Fetch as Googlebot, do your own site crawl (at the very least using Xenu), check WebmasterTools for messages, check your DNS settings and so on.
Other than a technical error, the kind of ranking problems you describe are very often tied to backlink programs that stick out to Google as less than natural - have you been engaged in trying to artificially build up your backlink numbers and/or external keyword anchor text?