My biggest mystery now is what to do about my abs. It is my biggest problem area for fat. I know cardio and reducing over all fat is key along with diet. I read not to overwork them on here and I also read that Chad Waterbury article about over building your midseciton - more crunches builds a bigger muscle and takes away from a feminine look. How often should I work them out? Once a week? I usually do crunches with weights on my chest.
Losing fat is really 80% diet. Its as simple as that. Now I don't know what you diet and caloric intake was like before when you gained all that muscle but I would wager that you were in somewhat of a surplus but active enough to put on more muscle than you did fat. If you really had 12.5 inch arms and it was ALL muscle then it was your diet mixed with all that training. So what you need to do is figure out your caloric intake needs. A simple and close measure of this is using this formula...
Figure out your caloric needs including activity. Unless you are training for hours a day and have a hard labor job it will be around moderate for a normal exercise effort. People overestimate their activity levels alot.
Once you figure that out come up with a good clean diet. Whole foods, complex carbs, lean proteins, good fats. Make your caloric amount be around 500 less then what you would need to maintain your current weight. Strive for a smart nutrient ratio, a good start is 40-40-20. If you need more carbs, more protein, more fat just wait and see what your body needs. Listen to it.
After you get your diet in check focus on a really solid lifting routine and cardio efforts. As far as the Waterbury article I personally have a bone to pick with it one both a personal training standpoint of my own account as well as basic female body structures. However there is truth to it as far as ab training goes. If you want a slender waist, don't train your obliques and don't add weights to your ab sessions. I personally do 1 ab training session a week (which is hanging leg raises) the rest of my ab work I get through solid compound exercises. My chin ups make my abs more worked then anything else. I do core work as well for inner strengthening like planks and tuck ins, but that isn't for strength and muscle as it is for stability and structure.
Read around and put together a solid program. You certainly seem like you have the drive to achieve your goals, which trust me is really the full battle here. With the right information, training, and DIET

you can be thin and not thick. Good Luck.