Of course the pages are in their index. Google isn't a curated walled garden. I expect every page on the public internet to be in their index.
The question is one of rankings. The only time there is a problem is when a spammy site ranks above a more relevant site for a particular search. If I enter a very specific query that only hits a spammy site, then I should see the spammy site, because it's there. Google is a search index, not a "visitors guide to the internet."
It might be better to cripple the site rather than kill it. If all of Mahalo's pages disappeared you can be sure they would return en masse when they found the workaround for the filter. Blocking chunks of their content might make finding the workaround harder and may ultimately force them (or any other low quality site) to up the quality - yeah, I know I am deluding myself.
Do you consider that site to be a quality & non-spam source of information?