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Klarke hit it briefly in his reply. The problem is that you were "artificially" achieving your previous rankings and traffic by means of paid links. Those links are what Google was using algorithmically to value your site for ranking purposes. When you received the manual links notice from Google (you were discovered using paid links) Google placed a filter on your website AND discounted those paid links. When you removed those paid links to recover from the manual penalty you also FUNDAMENTALLY CHANGED the backlink value and overall algorithmic strength of your site in the process. Bottom line: when Google removed the filter from your website you were left with a much reduced backlink profile that no longer had its previous ranking strength. The result? Lower rankings. Further, there have been over a dozen algorithmic Panda, Penguin, EMD, Top Heavy and other assorted  updates by Google during the course of 2012. Any of them could have also adversely affected your sites' natural ranking profile. If you haven't done so, head over to the www.panguintool.com and compare your site accordingly against the more notable updates. That will allow you to pinpoint if and where you were affected so you can make necessary content or backlink changes as needed. I hope that helps. Otherwise, drop me a note for a full penalty site audit and we can go from there. Happy Holidays and good luck!

Yes, we do this. And still Google don't process our reconsideration request postie as i wrote before.