I did a link wheel around 5 months ago and ever since i haven't rank #1 i don't know if it because of the wheel i did i didn't have no experince but i still did it.
First of all I think you have to check that how much links is been crawled from your link wheel. If there is any broken link it is treated as broken wheel.
It is much more involved, but much more powerful. The link juice come from a variety of sources and is funneled into your web site. Think of putting your thumb on a garden hose - the spray becomes more powerful. If you have a link from a bad neighborhood (where you find loads of link spam) google will penalize you.
I have been using link-wheel for quite some time now. And in my honest opinion there is no damage a link-wheel can do. The WORST CASE SCENARIO that I experienced was that the link-wheel had no impact on my rankings.