What is the ruling on shunning certain individuals who have caused great psychological harm, and is it permissible to shun someone who has caused harm in order to ward off their evil?

It is not among the forbidden abandonment to cut ties with someone whose association is feared to cause real harm in religious or worldly matters. Some scholars have considered the Hadith (definition) of Ka'b ibn Malik as a fundamental principle for boycotting innovators (Ahl al-Bid'ah) and those who introduce disliked innovations into the religion. Therefore, if one fears harm to their religion or worldly affairs, or an increase in animosity and hatred, from associating with and speaking to someone, then abandoning them and keeping distance is better than being close to them. Many a beautiful cutting off is better than a harmful mingling. So there is no blame or sin in forsaking and boycotting those whose evil and harm you cannot guard against except by abandoning and cutting ties.