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This is a side point, but I think an important one. It isn't your site that was under position #2, it was a page on your site, probably called default.php or index.php or something like that. It doesn't really matter, because the filename isn't actually part of the URL, that's handled by a server-side transfer or redirect. But no matter how many pages your site has, it sounds like you're only talking about the root page.
I bring this up because you mention having created lots of pages as part of your SEO plan. The new pages you create and optimize are also competing with your root page aka just your plain ol' domain. This won't force that page down by more than one other place if another page beats it for a Google search, but know that when you add a page called worldofchat.co.uk/chat.htm that doesn't help your domain name URL come up any higher.
How long ago did your rankings drop? Sometimes it's temporary while Google adjusts things, and other times it really does mean something.
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