Assuming that the story is true, I still think it is incumbent on the school to find out what the circumstances are before expelling a student a few weeks before graduation. What if the boy was simply asked to borrow something from this neighbor and it happened to be that the girl was the one in the house to give it to him? Should he completely ignore her until someone else from the house is available to give him something? I understand the idea/hashkafa of boys not interacting with girls. However, there are times when things are not what they appear. A nosy, self righteous neighbor can ruin a boys life over something that was innocent in the first place and, as someone else pointed out, lead him OTD.
Very sad