Answer came from Google

My site was affected very badly by the algo change. I asked google to reconsider my site. Today the answer came.

Here it is:

We received a request from a site owner to reconsider www ....com for compliance with Google's Webmaster Guidelines.
We reviewed your site and found no manual actions by the webspam team that might affect your site's ranking in Google. There's no need to file a reconsideration request for your site, because any ranking issues you may be experiencing are not related to a manual action taken by the webspam team.
Of course, there may be other issues with your site that affect your site's ranking. Google's computers determine the order of our search results using a series of formulas known as algorithms. We make hundreds of changes to our search algorithms each year, and we employ more than 200 different signals when ranking pages. As our algorithms change and as the web (including your site) changes, some fluctuation in ranking can happen as we make updates to
present the best results to our users.
If you've experienced a change in ranking which you suspect may be more than a simple algorithm change, there are other things you may want to investigate as possible causes, such as a major change to your site's content, content management system, or server architecture. For example, a site may not rank well if your server stops serving pages to Googlebot, or if you've changed the URLs for a large portion of your site's pages. This article has a list of other potential reasons your site may not be doing well in search.
If you're still unable to resolve your issue, please see our Webmaster Help Forum for support.

Sincerely,
Google Search Quality Team

Can you please help me understand the meaning of this answer fully?
Am I penalized or not?
If I'm not penalized why is my site still in a pathetic position?