Thanks so much for your help guys, I really appreciate it. Unfortunately, I can't seem to get this to work for me. I have nested the coding that Riamus2 posted into my on:nick events at the top, and I can't get it to catch at all. I even put a 'kick # $nick' in there for quick confirmation of it working. I've also tried iswm too. I even put a if ($chan == #mychannelname) above this as well with brackets to no avail.
It's still just a small simple thing away from working, isn't it? Thanks again for the efforts here.

var %i = 1, %t = $lines(G:\filepath\bannednickwords.txt)
while (%i <= %t) {
if ($read(G:\filepath\bannednickwords.txt,nt,%i) isin $newnick) {
ban -ku3 # 2 $newnick Not Allowed!
kick # $nick test <--added
return
}
inc %i
}