Restoring status

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Subject: Restoring status
  Hi everyone.

I have been working here on a Working Holiday Visa for the past year. I got a job, and then applied to extend my stay online before the expiry date on my Visa. However, As I had to submit the documents without an LMO, I selected the option - My Boss Has Applied But I Have Not Received It Yet- as that was the case. I assumed I would be contacted when they got round to processing my extension about this. I carried on working under Implied Status while this was processing.
There was some difficulties with the LMO however, (sending in Wrong form, getting it back, sending in, back, waiting ..etc) and so I never got one. My boss is still in the process of sending it in again.
I have just received a message (Sept 9 2011) from the immigration office stating my extension claim was denied because of the lack of a LMO, and stating my status expired on 31 Aug 2011.

Question time:

A) I understand I have to restore my status before 90 days. To do this, all I need to do is complete the extending my stay form, pay the fees, plus restoration fee, and submit a valid LMO. IS THIS CORRECT?

and B) IMPORTANTLY- can I work while I wait under implied status, or because my status expired, am I out of luck?

ALSO- I am here because of my girlfriend. We have been together over a year now, would De-facto with her be a better route to being able to stay? Probably still have issues about being able to work while it is in process though.

I feel like the Govt. here does everything in it´s power to make this as hard as possible. They affect businesses that employ us foreigners, not just the foreigner! Surely if they give you the option to submit a form without the LMO by clicking My Boss Has Applied But I Have Not Received It Yet, they should contact you asking if you have received it yet before declining you? They do state they will email if extra documents are needed after all.
And ending someones status before informing them their application is declined, and then not allowing them to work while they try restore status, isn´t much help is it? 3-4 months is a long time waiting for work.
This last paragraph is not important I´m just venting!
Any help would be greatly appreciated, I am 90% sure of the answers to my questions, I just can´t find it written down plainly on any Govt. site (they are absolutely terrible). And if anyone who works for the Govt. takes pity on a poor young man and can help my case out, I will always have a bed in New Zealand where you can stay! ( Not a bribe, just saying).

Thanks guys

[10-09-2011,13:03]
[**.224.147.175]
sam
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