The site started to go downhill around that period because of power users and some started to move to reddit, but it was still pretty niche.
I stayed on digg until v4, then I moved with the masses over to reddit. They lost over 30% of their users that month!
The main migration was actually in 2010 after the v4 redesign. Digg wasn’t dying in 2007-2009, it was one of the hottest websites on the internet.
I’ve found that I have to wait up to 30 seconds for a community to show up in the search. At first it says there are no results, but every community I’ve searched for has eventually appeared after waiting.
I think this happens if I’m the first user from my instance to use the community. The more popular communities show up straight away.
That might be more to do with your social circles. There was a shit ton of teenage drinking happening when I was in high-school.