When Google's Webmaster Tools acts funny..

[Prestige]

So, One of the site I have been working on lost its rankings and as it seems,
less and less pages are indexed.

Tried using Google webmaster tools to try and understand what is going on and why was my site chosen to be removed.

I found quite a lot of misleading information there such as:
"Pages from your site are included in Google's index."
This changes almost on a daily basis. Some times it says no pages are indexed at all.

Web Crawl - Not found (496)
Only recently it showed that. I think it was 2-3 days ago. And it seems that
instead of going to the www.domain.com/Dir/filename.html, it gives me a 404
saying that it could not find www.domain.com/%2FDir%2Ffilename.html

Query Stats
Shows that I rank very high for non-related terms which I have nothing to do
with. Medical terms, that my competitors placed using some link exchange
service in order to try and "flag" my site as spam.. I suspect it worked well
since as it seems, my site is now not shown for my real terms and slowly
getting thrown out...

Webmaster tools also shows:
"All data is averaged over the last 7 days. " - Its been more than 7 days since
my site got removed from all keywords and it still shows older stats.

Top search queries - Showing the queries I got "attacked" with
Top search query clicks - Showing mostly what I really ranked for, which
of course, converts better.

Going on to page analysis:
The encodings distributions shows that almost all of my pages are: "US-ASCII"
Quite strange, since all of my pages are using UTF-8.

Needless to say, in "In external links to your site" I see those links to medical
related terms.

I sent my Re-Inclusion request last week, did not get any confirmation mail.

The site is in a very competitive field and I'm aware that others have tried
taking my site down in rankings. I am also 100% sure that the techniques I
use are more natural and "White" compared to others.

It is very disturbing to realize that by working hard and being patient I still
got thrown out, while others are using techniques which I've personally chose
not to use, exactly because of that.

Is there any thing else I can do? Is there a way I can tell at least what action
caused my site to get penalized? *frustrated*