With help from a fellow Dper we came to the conclusion that my site is in the sandbox! Guess I will start working on links and Content.
I think my sites are in the sandbox tooo... and that's what I'm doing.. My traffic has slowly increased every month or so.. but older sites with much fewer backlinks rank a lot higher than me in some cases.
I a situation like this, it hurts to be sandboxed. At least console yourself by the fact that you will be dominating SERPS, once you are let of the sandbox.