Do asterisks and other symbols actually protect from being banned ?

Okay thank you; weirdly enough every time I’ve reported someone i’ve gotten a thank you.

No. Using symptoms will not protect against suspensions/bans. As long as you've reported him, the enforcement team will investigate and take appropriate action. They occasionally will send a thank you message when they have taken action, but that is rare
so you won't know exactly when they take action.

This may seem like a stupid question but: Did you replace the *at* (including the asterisks) bit with the @ symbol?

It would be an easy thing to do

You could absolutely be banned for this, despite it not being your "fault".

The best thing to do is contact Xbox live support, actually contact them via phone or support chat, and explain the situation. Don't expect an email or tweet to protect you.

It's an unfortunate consequence of people modding lobbies. They draw others in as well and really ruin people's Xbox Live experienced. Make sure you've filed complaints on the Gamertags from the lobby, and have your friends do the same.

Best of luck.

Imagine being an adult and think it's acceptable to send this to anyone. And, never mind that, but actually complain that Xbox, by trying to protect anyone from insults and bullying, is at fault. You're a grown adult, you shouldn't be sending anyone messages
like this. You were banned for insulting a player.