I don't remember all of the details, but Spazzo was staff for a short time during 2.0's development. Mystic and a few others saw him as an antagonizing prick so they banned him, and then I guess a few other members left the staff, which they attribute to Spazzo being a prick. I was pissed by the ban personally because I wanted SRB2 to become a more open and inviting community, and Spazzo was one of the only members in a position who fervently would push it in that direction.
That being said, it's been about five years, and I'm pretty much over it or else I wouldn't be here obviously. I don't get why everyone else is still hush-hush over it, but I guess some wounds heal slower than others.
Part of the reason we keep making "he who shall not be named" jokes is because every time Spazzo comes up, like clockwork he reappears and puts fresh salt in old wounds, then rubs it in as much as possible for good measure. To try to be as clear as possible, here's what originally happened (as objectively as I can write it, but obviously this is my side of the story):
Spazzo was brought onto the team as part of 2.0's development. He was egotistical but was still quite passionate and worked hard to make SRB2 better. As you stated, he was a big part of the room system on the master server to try to make the community more inclusive. The problem ended up being that ego after the 2.0.X releases and the dead period in 2.1 development began. For those that don't know, generally after a large release on hobby projects like this, there is a long lull in activity as everyone goes to do other things for a while. 2.0's patch cycle was a royal bitch and needless to say, the dev team was burnt out and not being productive at the time.
During this lull in activity, Spazzo basically went into Sky Sanctuary and tried to declare the project dead and that we should all pack up and do something else. Now, it's fine to want to do something else, of course; this is a hobbyist project and we all do this because we enjoy it, but he was actively trying to get people to quit the project and do something else. When a lot of us told him that we weren't interested in quitting and were just taking a break, he decided to quit regardless and I locked the topic. Up to this point, everything Spazzo had done was acceptable behavior.
Problem is, he didn't quit. Instead he started messaging people in private trying to get them to quit with him, and although his success on this is debatable, it was still in very bad taste. He'd post in the developer channels to complain about the way we were doing things. He also kept coming back and telling us all we should "move on" and pushing his original agenda about doing something else.
Then we had
this topic about submissions delays, and everything fell into place at once for a pure shitshow. He basically stopped even trying to be civil and created a flamewar that was removed from the original thread, which I still have archived here from one of the first times this issue came up:
http://mystic.srb2.org/spazzoflamewar.htm
After getting banned in that thread, he ban evaded twice, leading to a year-long ban. Over the duration of the ban he expressed remorse, apologized, and smoothed things over, but the damage was done. We all saw the outburst and complete disregard for our feelings and opinions, and realized that maybe we didn't really know him as well as we had originally thought. When the ban expired he continued his previous behavior of coming back every few months to start shit and express his opinions as strongly as he possibly could and it was becoming increasingly clear that he craved attention above all else. He did things like host streams where he'd talk about dev secrets and get as much attention as possible (for example, he talked about Metal Sonic publicly before 2.1's release). He had a consistent strategy where he'd intentionally say things that would make people angry at him on purpose to get attention, but claim he was just doing it because he "cared" or some shit along those lines, always refusing to admit that it was actually just trolling. Every time he caused a problem, he'd be arrogant about it initially but then apologize later, which became a clear pattern as time went on and his apologies started to wear really thin.
The final straw on the forums was when he resorted to trolling on the initial drama about the 2.1 emblem revamp because we didn't respond to his original post about it. After two and a half years of him constantly starting drama and intentionally trolling the dev team, I had personally gotten so fed up with dealing with his shit that I banned him on one of the few examples of a ban for the pure reason of maintaining order in the community. While I'm sure he'd still fervently deny trolling to this day since he seems to have an aversion to that word, I would personally call him the most successful troll this community has ever seen. He certainly succeeded in making
me fucking mad.
However, that was not remotely the end of it. Every few months he would ban evade on #srb2fun to continue to make new drama. If anyone brought up his name it was like a devil summoning ritual. He STILL does this; his most recent endeavor was coming into the channel to query spam for Roly Poly Putt's PC release. That's right, he resorted to actively spamming people on SRB2's IRC to advertise his project. I have told him time and time again that I never want to talk to him again, yet he continues to query me for some reason. He's like the worst ex you could ever have, constantly calling back and asking to get back together, but I know better and don't want anything to do with him.
Basically, in conclusion, there is not any one incident that caused this giant festival of drama. It's just a giant clusterfuck of years upon years of terrible choices. While I won't claim it's ALL his fault, I do think his banning was by far the best choice for the rest of the team to not have to deal with his shit as frequently. I'm positive we're going to hear from a he who shall not be named in the near future, but if this is what it takes to stop hearing questions about it regularly, so be it. The ignore function is a powerful tool, I guess.
