Giving away free templates with a link to your site in the footer of each, and advertising the giveaway on adwords, yup that'll do it too. Lol.
I'm presuming if it was a manual penalty Google wouldn't de-index for the poor use of words.
Google deindexing a website on such grounds would open the biggest gates to lawsuits ever seen. Anything like that would amount to censorship and the last time I checked this was not China :)
I can totally see a template website reselling someone's templates without permission or not paying for the images used, etc. I am 100% certain it's legal issue, unless:
How about hosting? Have you checked with the hosting company or your logs to make sure they are not blocking Google? I never encountered the OP scenario myself, but if I had to assume, I would think that, if Google manually deindexed the website, it would deindex the entire site at once, rather than gradually losing pages in WMT.
I vaguely remember a case from a long time ago, where websites disappeared from Google because the hosting server was set up wrong or something. Worth checking out either way...