Paul,
I am afraid you are confused. Since Putin became President, Russia's economy has significantly improved.
First, allow me to detail what happened under the Yeltsin years.
1. Yeltsin inherited a declining economy that could barely pay for the state's expenses, and his rapid transition to a market economy made the economy worse, for a time.
2. Corruption was rampant because of poverty, underfunded public services, a lack of transparency, and the government's desperation to pay state expenses. Firstly, Yeltsin's privatization schemes such as the one that issued stock vouchers to Russian citizens benefited wealthy individuals. Rather than buy stock, the mass of desperate Russians illegally sold them to wealthy individuals for cash. This made wealthy individuals wealthier, as they were able to purchase state assets for less than their worth. Secondly, there was little transparency. This allowed political insiders to enjoy unfair competitive advantages. Thirdly, the criminal justice system was underfunded. This caused police to demand bribes, and businesses had to rely on the mafia to enforce their business contracts. Finally, Yeltsin was compelled to hasten privatization by exchanging state assets for money to add to the state budget, and the money the government received was usually much less than the market value of those assets.
3. Political power fragmented. Firstly, Yeltsin and Parliament issued contradictory orders, which caused governors to cherry pick sides. This escalated in to the 1993 coup. Even after the new constitution had made the president in to a 'super president,' Yeltsin was still forced to make concessions to economic and political elites. For example, he promised the governors "all the autonomy you can swallow" in the 1996 elections. Secondly, governors pushed the limits of their autonomy. For example, some issued their own passports and currency. At the extreme, Chechnya seceded. Unable to tolerate the political liability that Chechnya posed, Yeltsin was forced to send inexperienced conscripts to crush the rebellion after the professional military units refused to participate.
In summary, the Yeltsin regime was usually desperate for money to pay for the state's budget, and the concessions it was forced to make made it weak and dependent on political and economic elites.
But Putin changed all that. He has:
1. Restored the vertical balance of power.
2. Balanced the budget and instituted a flat tax.
3. Eliminated low level corruption. Police no longer demand bribes, and the state's monopoly on enforcing business contracts has been restored.
4. Significantly grew the economy. Nominal GDP more than doubled under Putin's presidency, average salaries increased from $80 to $640, the middle class grew from 8 million to 55 million people, and poverty fell to 14% from 30%.
5. Crushed the Chechnya rebellion.
Now it's true that Putin's regime is authoritarian. He has dealt with oligarchs who have misbehaved, and replaced them with professional colleagues he trusts. It's not hard for him to do, since every oligarch is guilty of tax evasion. Those who misbehave receive selective justice. Secondly, Putin isn't afraid to control the legislature with material incentives. Someone in the legislature who misbehaves may notice that their Moscow apartment or salary is withdrawn. Thirdly, Putin has shown a willingness to assassinate his most irritating opponents, rig elections, and use force to put down a demonstration.
However, unlike the totalitarian regime of Stalin or the weak regimes of Khrushchev, Gorbachev, or Yeltsin, the character of Putin's regime is moderate and closer to czarist Russia. Putin is like a referee to the elite. He settles their disputes, and maintains the balance of power between them by manipulating them to compete for his favor.
Now that I clarified the historical, economic, and political facts of Russia, it seems that you are confused about a few other important things. The first is strong leadership and Stalinist-style brute force. Stalin was foolish and would have suffered a coup, had it not been for Hitler's depopulation efforts during the invasion of the USSR. The second is the circumstances under which democracy is possible. You seem to think it's possible to create a liberal democracy by simply organizing the government that way. Well, that is not how things work. The political and economic climate determines the possibilities of government a state will have. It's possible that developments in Russia are moving towards a democracy in the decades ahead, but forgive my skepticism about the practicality of liberal democracy in the present. Without an individual strong enough to serve as a referee between the elite, they will fight like rats in the sack. Also, you are confused about the infighting that happened in 2007-2008. The infighting was between factions all ready supporting Putin. It was not a scheme to identify or purge his enemies, lol.
Finally, you have unfairly judged Putin. He can not be compared to dictatorships like North Korea. Putin has not depressed economic development or created a command economy to increase his control or buy the loyalty of his supporters like the majority of dictators tend to do. Neither has Putin assumed totalitarian control of the media. While it's monitored and guided to serve his objectives, it's much more free than other authoritarian regimes. Articles and political cartoons critical of Putin are occasionally circulated with little backlash from Putin's government. Moreover, Putin participates in press conferences, and although he restricts the journalists who are permitted, only some topics are completely censored (like Chechnya). Additionally, one way he deals with critical journalists in press conferences is to call on supportive or moderate journalists to either provide comical relief or change the subject. In totality, Putin has governed moderately and has been much more consistent with liberal principles than other authoritarian leaders.