I've just heard back from Steve and he posted the following...
Yes, they blocked it, but have restored it temporarily.
It appears they were right all along, and the server was infected, as were other Hetzner users. Once they told me what the malware was likely to be, I was able to find it and hopefully I can remove it.
That's very encouraging news and hopefully Steve can remove the offending malware. I suppose the servers may be taken down on occasions until the malware is removed but it seems to me at least the problem has been identified and will be fixed.