My situation is a bit unique, and after searching the forums, I did not find anything like it.
A few years back, I entered a top 20 institution as a physics PhD student. When I applied, I had a great general GRE, mediocre PGRE, good GPA from a virtually unknown state school but very strong letters of recommendation from both my undergraduate professors (with whom I published two journal articles) and a theorist with whom I worked at an REU at a large research institution.
At the time, I was really not very professionally mature, and didn't have a clue as to what area I wanted to research (I probably should have deferred.) I didn't spend the necessary time on my classes, (probably only spent 10-15% of the expected time on homework, didn't attend recitation sessions, didn't work with other students) and I bounced a bit between research groups, never excelling or performing very well until my last, in HEP experiment. No publications, but I did enough research to defend M.S. level work and exited the program in a non-thesis option, earning an M.S. by the skin of my teeth - barely 3.0 average GPA, some classes were 2.8 (Yikes!).
I exited into a job in the software industry where I professionally matured and did very well, but found my passion for the work lacking. It really drove home that my interests were still in physical science. So, I gave up the six-figures to return to science and am now working as a research associate in AMO physics at a small university (no PhD program) and will probably net a few publications during my time here.
There is no doubt in my mind that I wish to obtain my PhD and continue forward in a research-oriented position. My previous graduate classroom/initial research performance is absolutely not an accurate depiction of my ability or drive.
I plan to reapply for entry in Fall 2013 to a PhD program (starting fresh, no credit for my M.S. other than recognition that I received it) and wanted to know if anyone could comment on how the very poor classroom performance (minimum GPA to graduate), and seeming washout, will affect my application, in general. I think the software experience will be an aid, but it was a break in my academic progression, so that could be a wash.
I realize my chances will depend on the applicant pool for the year and other factors like how I retest in the GRE/PGRE, but does anyone think my 'marred' record will keep me out of a strong (subjective, yes) program?
Thanks for your time!