Hello speedingorange,
You wrote: "I have always been under the impression from reading online that an algorithm update would see a site destroyed for most terms and a notification generated in webmaster tools, however the site still seems to still rank for some terms, others however it has fallen off the face of the earth for. "
I think you have it backwards. The Panda update, which is NOT algorithmic, is the one that would that would "see a site destroyed for most terms and a notification generated in webmaster tools". The Penguin update, which IS algorithmic, is the one that would cause "site still seems to still rank for some terms, others however it has fallen off the face of the earth for". And a Penguin penalty does not result in a Google Webmaster Tools notification. (That is my understanding. I'm sure someone will correct me if I am mixed up, And I am OK with being corrected.)
Two of my sites are suffering from what I believe is Penguin damage. For both the damage is a lot of rank lost for only a few keyword phrases. Other phrases continue to rank normally. When I did a bunch of keyword research (using Moz, Ahrefs, and Majestic results blended together) I found that the few keyword phrases that I severely lost rank for had both:
- a high percentage of Follow links using exactly those phrases as anchor text, and
- links from sources that didn't really pertain to the anchor text or to our website.
My understanding is that these are the type of things that Penguin will bite you for. So we did remove or change a few of the anchor text links, and did a Google Disavow on most of the remaining links. We did leave a few anchor text links that were from good pertinent sites. This was done in early June, and we still have not seen any results. I have read that we will not see any big results from submitting a Disavow file until Google updates Penguin again. So we are keeping our fingers crossed until then.
Couple of quick things to explore if you are going to try a similar rescue. First, we did not pay any attention to our NoFollow links since they supposedly do not effect rankings. Second, we did create a nice file of follow links from all our link research, and used it as an additional submission with the Link Detox tool (the spreadsheet report from that tool is very valuable when checking for overoptimized anchor text). Third, we disavowed entire domains rather than individual links because we heard that was most effective.
Good luck!