Not sure what's happening, but first give it a little time if you haven't yet. I've seen my indexed pages bounce around sometimes in MSN. Maybe not to the extreme you're seeing, since I don't have 8000 pages, but quite a bit.
Yes, I just got finished putting up 30 or so new completely unique content pages... I also put up content in article submission sites and got lots of new links
Have your pages started to come back? If not is there a link you can post so we can take a look and see if there's anything we can notice that might be causing the problem?
I think, this is coz of new change in MSN search algorithm. This was happened to few of my sites also. but now it's ok. MSN will start index your pages soon. Don`t worry!!
Did you have server down problem before the dropping? Sometimes when there is such problem, your pages will disappear in a short time. But anyway, your site is not banned by MSN, because you still have some pages in it.
i did come up with a theory. If you site is new in msn, than you pages will get indexed quickly, yet will not be stable, as well as your ranks in msn. But if your site is old, and stable in live/msn (whatever they are now) than they have must have banned you. yet did you do anything wrong? did you change , add, move anything? put in another keyword?