Hi Enrique,
Firstly, the Panda update which you mention isn't penalty, it's an algorithmic updated that Google implemented with the general aim of reducing the number of poor quality sites in the search results.
By poor quality; they mean sites that have thin or duplicate content, sites that contain excessive advertising, and sites that are poorly designed or constructed.
If it is Panda (which it sounds like it could be considering the 18 month decline), a re-inclusion request won't help. This update is refreshed periodically (roughly every 4-6 weeks), so if you had fixed the issues on your site you would see your rankings return when it was refreshed.
The main issues to fix are generally around the quality and originality of the content, however depending how excessive your advertising is this might need to be addressed to.
There are some great resources out there for finding out if it is Panda that's effecting your site, and if so how to recover. My personal favourite is here on SeoMoz by Cyrus Shepherd:
http://www.seomoz.org/blog/beat-google-panda
From speaking to many Webmasters, the one thing I have found is that the people that recover are the ones who are willing to take a critical look at their own website and really own up to it's weaknesses. For example, you say your friend tried excellent content, but by what standard was it excellent? His own standards might be very different than that of Google.
The best way to stay ahead of updates like Panda is by being your own worst critic, and constantly challenging yourself to make your website the best it can possible be.
David