It's rarely too late. You have to do something pretty bad to get a domain totally blacklisted, although it is much easier to get a penalty applied. Remember that penalties can be lifted though.
>> I think im being penalized for inter site linking
The question you have to ask yourself is "have I got a steady stream of links from other quality, not-owned-by-me sites in my topic area?" If the answer is "No", thers your problem, and your answer. If the answer is "Yes", you have more serious problems
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