Anton Vickerman didn't host anything either. His site (surfthechannel) was also just a collection of links.
And, sure enough, he was held not to have committed any copyright-related offence.
So they got him on conspiracy to defraud [the record companies] instead. He's now serving a four year prison term after a private prosecution by FACT, a copyright industry trade organisation - an extraordinary move, initiated after the CPS (state prosecutors) refused to prosecute him. (Note: this is in the UK, not the US).
http://en.wikipedia.org/wiki/Anton_Vickerman
http://arstechnica.com/tech-policy/2012/08/private-justice-h...
Sadly, the Internet isn't our playground anymore. You have to watch what you do even if it's just curating links to things you can download for free.
But to respond to OP, IANAL but I think that you might have folded too easily. But it's understandable that you probably want to avoid a lawsuit at any cost.
Also, you might want to check this out
http://www.chillingeffects.org/dmca512/faq.cgi#QID862
and google around for 'wrongful dmca takedowns'.
E.g. look at the bottom of https://www.google.com/search?q=rihanna+diamond+mp3
Basically, a provider needs to provide contact information for a designated agent for DMCA takedown notices. Had Luke done so, and complied with legal DMCA takedown requests (as well as counter-notifications), he could have continued operating his service; however, that may have become considerably more work than he wanted to put into running the service.
The DMCA gives you a "safe harbor" from accidental copyright infringement. But once you know it's copyrighted you have to take it down. AKA, the DMCA notice.
The DMCA won't protect you from knowingly linked to copyrighted material and waiting until someone sends a letter. That's how Megaupload is getting pwnd.
"Finally, the service provider must not have knowledge that the material or activity is infringing or of the fact that the infringing material exists on its network. [512(c)(1)(A)], [512(d)(1)(A)]. If it does discover such material before being contacted by the copyright owners, it is instructed to remove, or disable access to, the material itself. [512(c)(1)(A)(iii)], [512(d)(1)(C)]. "