Why was I penalized for replying to a removed post?
You are not being penalized for replying to some else's removed post. When you make a post on LiveWire, you gain a point, so when a reply is removed, one point goes along with it - this is the system. The point of this is not to penalize you, but a way to keep the system accurate and current. If you gain a point for posting, it only makes sense to lose it once the post is removed.
Why was my reply removed at all? It's not my fault their post was removed.
When LiveWire moderators remove a post, they remove it for breaking some type of guideline. If they allow your direct quote to remain, or even your reply to the removed post to remain, what would be the point of removing the post at all? We cannot allow quotations to stay up if the original post is removed, and we can't allow direct replies to stay up when a post is removed since it would no longer make sense.