1script - 4:46 pm on Aug 27, 2012 (gmt 0)
@diberry: I had no idea an 80% single drop (much less the overall 98% drop over the course of two-three months) was even possible without a manual action. Short of an outright ban, I've not even heard of a manual action that can result in such drastic traffic drops. There's usually a trail of some obscure long tail keywords that can keep you at 5%-10% of the original traffic even when the worst manual action penalty hits (other than de-indexing outright, obviously).
Are you sure your issues are not a combined result of some technical problem, which, perhaps, led to the first 80% drop? Some unintended robots.txt de-indexing or some meta robots tags or maybe messed up URL query parameters in the WMT settings? Also, I've had something similar after a really bad hosting server blowup which brought the site down for 72 hours. Google traffic did fall off a cliff but eventually restored after 4 or 5 months (this was before the animal updates - I'm not sure is still behaves this way)
Anyway, I may be off the mark here with all the latest developments which can arguably reinforce one another (Panda+Penguin+DMCA demotion+transitional ranking+... - a perfect storm kind of situation) but when something as drastic happens, I would first look for a technical issue.