A response from Valve

Below are the core paragraphs of the response received from Doug Valente on behalf of Gabe and Steam:

"I have audited the ban on your son's account.  This audit verified that your son's account did connect to a Valve Anti-Cheat (VAC)-protected server with a cheat running.  A VAC infraction still allows him to play online on non-VAC protected servers (he needs to uncheck the VAC Protected option in the server browser). The infraction does not affect the Left 4 Dead titles, single-player games or third party titles.

"Valve instituted VAC to preserve a cheat-free playing environment for the majority of our game users who prefer to compete against other players without cheat technologies.  A VAC ban applies only to a set of Valve games covered by VAC.  A VAC banned account does not lose the ability to play those games online; rather, the account is restricted to playing those games on servers that do not implement VAC.  There are many of these servers around the world, and they can be found via Steam.

"As a rule, we do not disclose information about specific VAC infraction(s), so cheat creators don't get a critical piece of intelligence to help them circumvent VAC with new cheats.  Cheats are a serious threat to game play, which is why Valve publicizes VAC, in the Steam Subscriber Agreement as you noted and on Valve websites and user forums. 

"Your son's account was hijacked previously (May 2010) when he put his login credentials into a phishing site. He contacted Valve again in September of this year because he forgot his password, which we reset.  Now your son's account used cheats within a VAC protected game.  I'm afraid that your son is solely responsible for the security of his account and any activity that occurs on the account.  At this point, he needs to use the protected games on non-VAC servers. "

Immediately noting that there is at least one error of fact in all of this, and that there is a total disregard of my request for details held about my son (made in my view in accordance with their own privacy policy!) I will respond further in due course.