I do a lot of search engine stuff, and am baffled by Google's response.

It might be the redirect from the old site. Is this a forced redirect, ie, it automatically takes the person from that old site to here? If so, you might want to put a link on the old site saying "click here" for new site.

Blogrolls are fine, Google shouldn't care about those. Every blog has them. They arer more concerned with circular links, i.e. several mostly identical sites linking to each other. You're not doing that either. They consider this to be spamming them.

Other stuff to look for and change

text that is almost the same color as the background
itty-bitty text

There is not automatic redirect on the old site. Just a link to the new site that must be followed manually.