[kh99]

In file includes/functions_newpost.php around line 1387 or so is this:

//If the target user's location is the same as the current user, then don't send them
//a notification.
$useremails = $vbulletin->db->query_read_slave("
	SELECT user.*, subscribethread.emailupdate, subscribethread.subscribethreadid
	FROM " . TABLE_PREFIX . "subscribethread AS subscribethread
	INNER JOIN " . TABLE_PREFIX . "user AS user ON (subscribethread.userid = user.userid)
	LEFT JOIN " . TABLE_PREFIX . "usergroup AS usergroup ON (usergroup.usergroupid = user.usergroupid)
	LEFT JOIN " . TABLE_PREFIX . "usertextfield AS usertextfield ON (usertextfield.userid = user.userid)
	WHERE subscribethread.threadid = $threadid AND
		subscribethread.emailupdate IN (1, 4) AND
		subscribethread.canview = 1 AND
		" . ($userid ? "CONCAT(' ', IF(usertextfield.ignorelist IS NULL, '', usertextfield.ignorelist), ' ') NOT LIKE '% " . intval($userid) . " %' AND" : '') . "
		user.usergroupid <> 3 AND
		user.usergroupid <> 8 AND
		user.userid <> " . intval($userid) . " AND
		user.lastactivity >= " . intval($lastposttime['dateline']) . " AND
		(usergroup.genericoptions & " . $vbulletin->bf_ugp_genericoptions['isnotbannedgroup'] . ")
");

I think if you add the line in red it will eliminate banned users from notification emails.