Rankings in the 200s after several years on first page

I just bought a competing website (I own the keyworddomain.net and bought his keyworddomain.org). We have both been in this business since 2008, and both have ranked in the first page for all this time. He wanted to sell the site in 2010, and I saw that in early 2012, his site fell out of the rankings. I opted to buy his site for almost nothing.

However, most of the pages is not ranking at all in google. They are in the 200-400 rankings in webmaster tools, but I get some traffic from Bing and Yahoo! where they rank in the first pages.

What does this mean? This is an old site, so I guess it isnt sandbox or google dance? This site hasnt been updated since he made it (in about 2008/2009), but its a solid site with good content. I have added a blog and gotten some nice links to it and plan on adding a facebook page. Should this help with the rankings?

 

It will probably help in time.
He might have had a lot of paid links that have expired.

 

Check his backlinks - either he stopped building them up or did some Black Hat SEO.
For checking backlinks you can use free version of ahrefs.