Busting Scams - From HYIPs to Identity Theft Insurance

I'm still pissed about this, I admit it. I finally got my money out of my paypal account after 2 YEARS.

As far as I can tell, my big mistake was for receiving payment from an idiot who misused his account, or, he posted my paypal information on his site asking his friends to help pay me for the video chatroom I was hosting for him.  Does this qualify as a SCAM?  I sure think it does.

Dear Schmuk,

We are hereby notifying you that, after a recent review of your account activity, it has been determined that you are in violation of PayPal's Acceptable Use Policy. Therefore, your account has been closed. ... it is the company's policy to hold the funds for a period of 180 days. Once the 180-day timeframe has elapsed, PayPal will release any remaining balance
-------- and, later.....
We regret to inform you that we cannot overturn the limitation on your account... your account has been closed.
-------- and...
... log in to PayPal as soon as possible. Once you log in, you will be provided with steps to restore your account access. ...may result in further limitations or eventual account closure.
To review your account and some or all of the information that PayPal used to make its decision to limit your account access, please visit the Resolution Center. If, after reviewing your account information, you seek further clarification regarding your account access, please contact PayPal by visiting the Help Center and clicking "Contact Us". [no such information was there, the "Resolution Center" just stated that their decision could not be appealed.] We thank you for your prompt attention to this matter. Please understand that this is a security measure intended to help protect you and your account. We apologize for any inconvenience. [What the....]
-------- and, finally
We have reviewed your previous correspondences and determined that our action on your account, along with a sufficient explanation of our actions has been provided. Therefore, we consider this matter closed.