a) If i was the owner of the site i wouldn't want to leak PR on every page even if i did like the work that was done

b) If i was the website company i wouldn't want sitewide footer links on sites which make it look like I am paying for sponsored themes

c) if the links are nofollowed, both parties lose, PR is still leaked from the owners site and benefit is not gained for the website company

I think the best solution is a dofollow homepage ONLY footer link. This is the highest PR page, usually the most traffic so good visibility for advertising,  you're not creating tons of sitewide links with identical anchor texts, and the owner is only leaking some PR on their homepage.

subfolders are better than subdomains, it's all under one site instead of 59 (according to obama) individual subdomains.

that was an old school strategy when Google really gave push to having the keywords in the domain name and spammers took advantage of it to rank better by creating subdomains for each keyword phrase

No this won't work. it's called pagerank sculpting and used to work but Google fixed that a couple of years ago by making the nofollow counts as a link and instead all you are doing is throwing away your page juice.

I'll go one better. DON'T COLD CALL ME. I know how to use the internet to find things.

Don't use WIX or you'll be wasting your time if you want good SEO.

Consider wordpress if the site is going to be substantial because it's a widely used CMS so anyone can hop in and knows how to use it.

If it's a small simple site and a CMS is not needed you can download a free template, there are tons of free template sites on the web. Remove any sponsored links in the footer if you're using one of those though.

Absolutely not, your site is aged. A new site is like starting all over even if you do 301 the old site to the new.

a) work on improving the on page SEO on your site

b) if that new domain is available you could play around with setting that up as a stand alone site and see if you can get it ranked #1, it could take 6-12 months before Google really trusts it enough.

c) if it's that old and outdated maybe he wants to sell it at a reasonable price if it's worth that much to you?

If it's a commonly used acronym then both the full keyword phrase and the accronym should be included in the SEO optimization process.

Not a definite penalty because of that but you're in a place you don't want to be. I would undo your link exchange campaign before you get that dreaded email from Google in WMT. Link exchanges are very easy for Google to detect.

BOTW is just another link and citation. If you are having trouble getting quality links naturally from around the web, then BOTW is most likely worth the money. I heard a recent Matt Cutts video where he did speak favorably of BOTW. However, I strongly advise you to try to create likable content that can easily be shared.

Two separate issues

a) keyword density. it is now better to not overuse your keyword or keyword phrase in your content, your example is way too high. you only need a few instances in the content - add synonyms and similar industry terms rather than the same keyword over and over again. it reads horrible and Google knows you're keyword stuffing.

b) content on page. yea the word count absolutely matters in a post panda world. flimsy pages with 250 words or so will be considered low quality. pages with 500+ words will have a much better shot at ranking.

You need to research on exactly what channel of traffic has declined and then you can start analyzing the cause of loss. I would spend time analyzing each traffic channel and check for things like unique search queries and unique landing pages per channel. I would also pay attention to the Google and Bing Webmaster tools and check for crawl issues.

You say "the service was basically a backlink building farm."

If links are your major concern I ask you this -  are these links pointing to your homepage or internal pages? If internal pages you can simply change the URL structure and 404 all of the old URLS and the links will no longer be pointing to your site, problem solved. If they did link building to the homepage you would need to go through them and contact the webmasters and ask them to remove which is very time consuming.

That being said, if you don't have a penalty from these links you might be OK, and 404'ing these pages would cut off your PR and could cause a major drop in rankings. Like Alan said, make sure your on page optimization is squeaky clean.