Melissa.
If anyone knew the answer, they would be going around selling the ability to fix panda and other problems, but I don't think there is anyone outside of google who knows the answer. We are on our own. The same thing that happened to you happened to us over 12 months ago and I'm still struggling to find a cure.
Working on a drastic change next week, but that change will not help you - your site is much too small for this change.
Not a lot of this makes any sense.
Linking to other sites - so is everyone else and they are not affected.
short content - so are many others and we're not hearing from them
some racy content - maybe, but look at all the others.
You have many incoming links from big sites. Maybe their algorithm is so paranoid about new links that it has hit you.
Here are just about my final ideas for you, after this, I can't think of anything.
1. Do you have any copyright content that someone could have reported you for?
2. Are you linking out to any bad sites - check all of your links - including the ones in your footers and sidebars.
3. check your pages with "fetch as googlebot" in case they can't find what they want
4. Check to see if you've been linkbombed with a ton of bad links, by someone who doesn't like you.
5. Register your writers with a google profile and link from their profile on their site to their google profile
You said you checked WMT many times, so you didn't get an unnatural links message
Two possible reasons nobody else has answered - they don't have an answer - or maybe they are too frightened to connect with you, because of the takedown.