Do you think the demoted URLs being a "main menu" page is part of the issue? If so, does your main menu use text links that are loaded with strong keywords? Also, how many links are part of the menu?
We did think that in the beginning Ted.
We have two, top-level hierarchical text-based menus on the site. The "Main" menu, stretching horizontally across the top of the content. (between header section and content body) A second, "Sidebar menu" (just our name for it) near the bottom of the sidebar. Both menus are similar, but not exact, and rarely on the same screen together.
The main menu is 8 links total, linked to the main site sections, the original text links were an example of: home, widget types, widget brands, widget buying guides, widget rebates and special offers, widget reviews, widget faq, etc.
The sidebar menu contains links to those main sections, as well as additional support sections for the site. Our forum, Customer support pages, Office location information, etc.
Over optimization was the first thing we tackled in April. We made several changes to menus first, and then approached it at the page level, and looked for ways to scale back the content optimization without hurting the user experience.
On the menus, we removed the repeated occurrences of "Widgets" basing that on the fact the site was 100% about those Widgets, and Widgets are a part of the domain name. Thus we went from "widget brands" to just "brands", "widget types" top just "types" etc, however we did keep the a-titles at the full name (widget brands), unchanged from the original.
We also changed the URL's to remove repeated occurrences of "widgets". Originally, we 301'd all old urls to the new pages, and after we reached out and asked Webmasters to update their links, we eventually dropped the 301's completely. We monitored logs (and webmaster tools) for 404's and when spotted, updated those links immediately.
A few months after we made the majority of changes to the site, you (Tedster) posted about the G* spam detections and rank modifying patent (link
[webmasterworld.com]), and we think we may have been a great candidate to prove that theory for G*. :/
Other Notes -
The pages that are penalized to end of results do still have PageRank, and the PR still changes on toolbar updates.
In alternative custom-search engines like Foxstart, (sites that use G* custom search) the pages rank in the top positions, similar to their original rankings, and the snippets reflect current changes. The same pages are those which are effected by the -950 in G*.
Another observation: New content that was just published yesterday ranked almost instantly in Foxstart, whereas it's still not found in Google main engine. (partial title search shows sitemap in G*, not actual page with the title)
In mid May, after cleaning what we felt **might** be hurting the site, we submitted a detailed reconsideration request to Google, and were told that there were no manual penalties against the site.