What does a system restore do? Will it wipe all my files?

It means you restore it to how it was the last time you backed up, before the infection, so it would make your computer exactly how it was then! However I would still recommend going through the other suggested steps first before trying this as it may cause you a little hassle!

:21"]Surely this must be a new plugin or something installed on the server, because lately there have been a lot of people affected by this!! Or has Minetown started corss-referencing player IPs with spamhaus blacklists?

NoCheat is now using the spamhaus blacklists to watch for computers that are a part of botnets or open proxies, which can be used to attack/flood the server.

Apparently my computer is taking part in a botnet...

Ok well seems to be fixed im able to get back on minetown

Excellent!

I had that message two days ago when tethering from my iPhone. Resetting the connection assigned me a new IP and I was able to access again. Same issue as before I guess, Telekom issues you an IP that was flagged in the past and has not yet been removed from the blacklist. I have no infection on my phone.

Yes, many internet service providers randomly assign their clients IP addresses from a big "pool" that they own. It's not common, but sometimes it's possible to 'inherit' a blacklisting this way.