it sounds like what you need to do is file an amended return, both federal and state and local if you have one. This will correct your return. And then just file 2000 normally. Also, I am a little confused because the state tax withheld(on your W2) is equal to the amount of state tax you paid, unless you made other payments. On your W2 you will see State, local, federal, social security, medicare taxes withheld. When it says withheld, that means that it was deducted from your paycheck and paid to those agencies for you.
Usually, each return is "audited" for correctness according to the material that was filed with it (W2s and 1099s). Probably, you did calculate your return correctly and just are confused by the wording. At least that's what it sounds like. Did you get info from your state showing that you calculated incorrectly. If so then file an amended return for 1999 and correct it. If I were you I would call your state tax agency and ask them. They can usualy pull up your file on a computer and go over it with you right then.
Maybe have a friend look over it with you so that someone has the numbers and data right there in front of them. It is hard for me to tell you if/what you did incorrectly if I don't see the actual documents.
Good luck!!