Catra,
I totally understand, my job let me go stating they could not find a modified position for me, after working a modified position for a year and a half. The only change was I started on my rollabout. My atty told me not to resign, so I don't know why yours tells you the opposite.
I'm not sure about applying when I don't meet there needs, but my friend told me the same thing so tommorrow I will when I don't feel like such a looser.
Hopefully tommorrow will be a better day. But boy if the stress hasn't caused alot of pain.