You might also want to check your crawl rate on the webmaster tools if its dropping start adding some new content, Stagnant sites = bad optimization.

Also check out the google webmaster guideline

http://www.google.com/support/webmas...n&answer=35769

their not written in stone but does give you a good indication as to what google expects from you

If the original poster of this thread did not use one of those crappy sites that Fred referenced in his first reply, could this be a new variation on the Google Dance? Just thinking out loud.

Did you try to put up some poor links on your website? I guess, that can decrease your ranking or google could penalized you for that otherwise directory submission can't hurt you ranking at all. Share your website, may be anyone of us could help you.

If you don't find any problem in the Google Webmasters, the problem is not due to the link posted by you. Explore other areas. One other thing is that Directory listing may not be as useful as you think.

Directory submission is not the reason for penalizing the website by Google. Possibility of bad linking, duplicate content, keyword spamming etc.