Hi Zack,
Google's current guidelines (http://support.google.com/places/bin/answer.py?hl=en&answer=107528) on this read:
If you don't conduct face-to-face business at your location, you must select "Yes, this business serves customers at their locations" under the "Service Areas and Location Settings" section of your dashboard, and then select the "Do not show my business address on my Maps listing" option.
If you followed these steps correctly, it should not have caused your listing to disappear. However, there have been reports over the past several months from business owners who have had a similar experience. For example, Local SEO Andrew Shotland received a phone call from Google asking if he served customers at his location. This was in February, prior to the guideline update. When he answered no, his listing disappeared. See: http://www.localseoguide.com/hey-seos-if-google-maps-calls-dont-answer/
However, in cases like Andrew's, the vanishing of the listings happened because they did not choose to hide their address (generally, because Google hadn't yet clearly announced that they were supposed to do so).
Long before this, many people noticed that choosing the hide address function had the effect of instantly burying one's listing. Then, in November 2010, Mike Blumenthal reported that it appeared that this had changed and that hiding the address should not bury your blended listing, though it might still effect the Maps and 7-Packs of that time period. See: http://blumenthals.com/blog/2010/11/03/google-places-search-hiding-address-no-longer-buries-listing/
But, since the big guideline update in March 2012, (http://www.seomoz.org/blog/why-you-may-need-to-hide-your-google-places-address-asap) this issue was supposed to have been completely fixed and hiding the address was not ever supposed to bury your listing, though I have heard a couple of remarks to the effect that it may push your listing down a couple of places.
So, if you chose the 'serves customers at their locations' and 'do not show' options in your dashboard, according to my information, this should not be the culprit in what you're experiencing. Nor should removing a geographic modifier from your business description (using geo terms in descriptions has never really been considered a good idea and at one time, was forbidden by the guidelines). And, finally, gaining citations from directories should have the effect of improving your rankings - not destroying them.
So, at this point, there are several things to consider, as I see it:
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Your client is experiencing the effects of a bug.
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There is an external factor at play, such as a discrepancy of information between your current NAP (name, address, phone number) and 3rd party citations such as the ones you are building for the client via directories.
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The client has been penalized for activity Google has red flagged (it doesn't happen often, but it does happen).
I would suggest that you report the whole incident via the Google and Your Business Forum: http://productforums.google.com/forum/#!forum/business
If you do not receive a response from the Google Top Contributors or employees in the 'Technical Advice?' forum, your next step would be to try to use the troubleshooter at http://support.google.com/places/bin/static.py?hl=en&ts=1386120&page=ts.cs to report that the client's listing has disappeared.
I hope my response hasn't been overwhelming but the history of this issue is fairly deep. I sincerely wish you good luck in finding resolution!
Miriam