Confusing Results

I've started on my second website as my first one was pretty much a flop, and I've come across some odd issues.

I use OnlyWire.com to bookmark every post/page to about 20 directories each, and in every post I always link to my homepage (WordPress Blog).

Now I have a friend that I got interested in marketing some stuff, and he created a site as well, same format and everything and he's got about 20k searches / 10k competition while I have about 2k searches / 3k competition.

For a while my home page and all my wordpress blogs and blogger blogs owned page one, but now my main page has fallen off page one and some random posts remain fixed at that top (Live.com) that have maybe 2 backlinks as opposed to the at least 30 my main page has.

My buddy has slowly created backlinks, I'm thinking perhaps I built mine too fast and google/live saw this, and his is #1 on Live and approaching #1 on Google. While mine is on page 7 on Google, and way back on Live.

This confuses me because I picked a tiny niche that I assumed I could instantly dominate and am being buried and it's pretty frustrating. My friend is seeing great results in a more "competitive" niche which is awesome.

I've started to add more content and this time to only Digg it, as that was what my friend was doing. Do you think I did more harm then good by bookmarking to so many sites? Or am I making a mistake somewhere else?

Any help appreciated