How does Valve Anti-Cheat (VAC) work?

Solution 1:

From the Steam KB:

Important:

All VAC bans are permanent - Valve has a zero-tolerance policy for cheating and will not lift VAC bans under any circumstances.

Also,

Any third-party modification to a game designed to give one player an advantage over another is classified as a cheat or hack and will trigger a VAC ban. This includes modifications to a game's core executable files and dynamic link libraries.

And

The following will not trigger a VAC ban:

• Using chat programs like X-Fire
• Playing multi-player mods which do not modify core .EXE and .DLL files
• System hardware configurations
• Updated system drivers, such as video card drivers
• Using custom skins, sounds or map

So if your mod fall into second category but not first, you should be okay :)

It might also be good to know that VAC bans don't happen instantly, usually a random time between a week - 2 months you will see this ban occur. This is to help stop the cheaters from knowing which hacks actually get pass VAC Security.

Solution 2:

VAC works by scanning your system while you play any VAC supported game (TF2, L4D1+2, etc). I don't know what exactly it scans for, and in fact, that is probably not public knowledge at any rate.

Bans are unappeal-able, and final.

When it kicks in, you are unable to play online multiplayer on VAC secured servers.