You may not select as your User ID the name of another living person
You are not allowed to name yourself Bob. Someone out there may be named that.
Someone out there may be named anything.
Only gibberish names are allowed.
6. Restrictions. You agree not to do any of the following prohibited actions:
1. reproduce, distribute, publicly display or perform, translate, modify, adapt, create derivative works from, deconstruct, reverse engineer, decompile or disassemble in any manner Spiral Knights or any portion thereof
No translating the game, no writing fiction based on the game.
2. permit any other person to access Spiral Knights, or create or provide any other means through which the Games may be played by anyone besides you;
Literally not allowed to allow anyone else play the game.
You may not select as your User ID the name of another living person
I think this quite obviously refers to that you can't steal someone else's name.
1. reproduce, distribute, publicly display or perform, translate, modify, adapt, create derivative works from, deconstruct, reverse engineer, decompile or disassemble in any manner Spiral Knights or any portion thereof
Most probably refers to SK's code and other resources. Quite clearly, they don't mind fanfic. Fan translations are probably not ok since they would require reverse engineering the game's content.
2. permit any other person to access Spiral Knights, or create or provide any other means through which the Games may be played by anyone besides you;
If you'd read more in-depth and analyze the sentence, it's quite obvious that it says that you're not allowed to let anyone access the game through your account. That's to prevent people who have been banned from playing as well as prevent anyone from playing without having agreed to the ToS.
You wouldn't happen to be part of this club, would you?