Spy specifically was not.
A few addons that did similar things (warning for nearby enemeies and stealth) did exist.
The most notable was probably Radar. Radar was never banned or blocked. It was not very well maintained and wasn’t written very well. But worked that same as Spy by reading the Combat Log. A few others also did the same but I do not remember their names.
However, many people back in the day thought Radar should be banned. Mainly because they mistook it for another program that did exist that was a geniune hack (it read WoW memory) and it was bannable program by Blizzard. But Radar only used the combat log, so Blizzard never banned it. Like Spy.