The default settings seem to be:
$final_virus_destiny = D_DISCARD;
$final_banned_destiny = D_PASS;
$final_spam_destiny = D_PASS;
$final_bad_header_destiny = D_PASS;so the banned email being delivered is making sense. I will configure it to quarantine spam and banned emails as per your instructions.
Thank you for a very extensive reply! very helpful as usual 