Why too large of a deficit?

Are you measuring liquid foods and weighing solid foods? You may be eating more than you think.

You need to be eating a lot more than 700 calories a day! Your body requires a certain amount of calories just to function properly.

Calculate your TDEE
Eat 15-20% below TDEE
Weigh your food to track accurately

And you will see results.

Less is not more when it comes to weight loss. It should work this way, but it most certainly does not.

When you're netting too few calories, your body starts panicking and goes into starvation mode. You will lose weight but it will be painfully slow because you're slowing down your metabolism. You need to set a realistic goal (I tried to find a resource for you to set your weight loss rate accordingly but couldn't find anything except don't say lose 2 lbs a week unless you have 75+lbs to lose). And on top of that, you need to eat at least 50% of your exercise calories back because that's how MFP does its calculations.

Search the forums for "eat more to lose weight" and you will get a lot of anecdotal evidence of this. I wasn't losing on 1200 calories a day, but now I'm steadily losing a lb a week at 1350.

I had a problem recently which I resolved with a 36 hour fast.

Wouldn't hurt to try.

This is bad advice. You're not eating enough already.

I suggest reading these links:

http://www.myfitnesspal.com/topics/show/3047-700-calories-a-day-and-not-losing
http://www.myfitnesspal.com/topics/show/931670-bmr-and-tdee-explained-for-those-needing-a-guide

You need to be eating a lot more than 700 calories a day! Your body requires a certain amount of calories just to function properly.

Calculate your TDEE
Eat 15-20% below TDEE
Weigh your food to track accurately

And you will see results.

YEP!

My best guesses would be this:

(1) You're eating more than you think you are. It's very common. Are you weighing everything? If not, I'd highly recommend you do so. Even packaged portions can be off when not weighed (usually the gram equivalent is pretty good).

(2) You're not burning as many calories as you think you are. Hard to say here -- it's not as easy to track as the weighing food is. I use a body media arm band and it seems to be very good. Otherwise, just check your calculations against other websites -- the amount burned can vary widely, especially as to weight. I find the walking/running calculators that take into account weight, time/rate, and distance usually are pretty good. Everything else is all over the map, and is probably why so many just decide to cut many of the calculations down out of an abundance of caution.

(3) If you're really confident in your calculations in 1 and 2, then you probably need to see a doctor because something is throwing a wrench into the system. That could be a number of things -- thyroid issues, PCOS, insulin resistance, adrenal issues, severe vitamin deficiencies, etc. I had a similar experience and finally found a specialist that could address such issues -- and lo and behold, I had both a thyroid issue and insulin resistance. After getting that sorted it out with proper meds and diet, I started losing like a "normal" person according to my calculated deficits.

(4) As an aside, three things I'd suggest are: (1) lift heavy (Starting Strength, 3x5, Stronglifts, etc.), (2) eat sufficient protein (at least 0.7 g per lb body weight, and (3) once or twice weekly sprint sessions. The first two have been shown to maintain or reduce LBM loss when in a caloric deficit. Sprints have been shown to be an amazing fat burning tool (HIIT exercises in general -- but sprints are some of the best).