Thank you for your response. Allow me to answer the questions you've asked above.
1. The Disqus plugin has been on the blog since last several months (maybe since 2010). The problem was common - [seroundtable.com...]
By the way, Google continues to say that the 404 errors don't really cause SERP penalty and I've been told to look elsewhere. However, it's a fact that the rise of 404s and traffic drop are in sync.
2. We installed the tag auto-link plugin because we loved the concept that's been on Engadget for long. It helps users find more posts related to any topic. I disabled it because I was told that it could lead to several 'similar pages' on our website.
3. I'm worried about 'not selected' URLs because I've been told by the experts(?) that the trend in the increase of 'Not Selected' that we've on our site is quite the same as that of those website penalized by Google. Frankly speaking, I've fixed all the problems on the site and back to the default setup that worked fine. The 'Not Selected' is the only 'issue' which is yet to be addressed, if it's an issue at all. I don't know what else I should be fixing to get all the Google love back.
While for the last 2 months, I've been asking whether it's the 404 error; Google (including JohnMu) have said that they don't affect rankings.
So at the end of all the discussions - I'm still left with one question : What should I really fix to get our rankings back? Should I start removing discussions contributed by our members which "I think, Google will think" are 'thin'. Come on, we've 50k discussions on our boards!