That's a coincidence Baily2 as some friends and I were discussing this very topic on sunday. There was a "Gay Pride" march through our city on Saturday and when one speaks in opposition to such things you can quickly be accused of being judgemental and a whole host of other adjectives for good measure.
My own thoughts on these words of Our Lord are that I'm forbidden to judge anyone, however I still have to judge between right and wrong. I can judge my own actions and even those of others without actually judging the person. I can state that this or that action or behavior is objectively right or wrong without passing judgement on the one who's doing it.
Unfortunately when one points out the wrongness of an action to someone who's committing it, that person automatically presumes that they themselves are being judged.
I have to do this at times with my children and I do so because I love them. Not to do so would be neglectfull of my duty of care towards them and even when they don't like what's being said (as none of us do) they do really know that I'm doing it because I love them.
One of the spiritual works of mercy is to admonish the sinner. There are very wise guidelines on how and when to do this on an Audio Sancto sermon; it's entitled "Fraternal Correction. When in doubt do not give it."
So I feel that we are always bound to judge the action or behavior but to leave the judging of the person to God.
This is why it is right for you Baily to be discerning of those who are permitted to be with your children and you can do this without passing any judgement on the individual concerned.
I do this all the time concerning my young grandchildren without any qualms of conscience and I even do it with my older kids regarding the company they keep. They of course can chose to ignore my advice but it certainly won't stop me giving it.