Jamie makes an important point about understanding these verses, "I read this Scripture as a principle based idea. By that I mean that the underlying principles are universal, but the application in specifics are not."
I will add my thoughts at this time with the disclaimer that they are simply my opinions, not a scholarly commentary.
Matthew 18:15-17 (Amplified Bible)
If your brother wrongs you,
I believe this passage refers to personal offense between peers. It's meaning has been broadened to be used in situations of unrepentant sin by church members. However, I don't think that was the intent of the passage, and when imbalances of power are added to this equation as disciplinary proceedings, it becomes distorted from what it should be.
go and show him his fault, between you and him privately.
Inheritor said, "It shows the process to address the grievance privately first so as not to call attention to the person's sin against me thus not allowing for gossip to start."
Perhaps rather than the focus being on "the sinner," the focus of the passage is intended for us to teach us how to correctly handle conflict and offense. Triangulation is the practice of venting our offenses to a third party rather than the person involved. It is unhealthy and doesn't produce reconciliation.
If he listens to you, you have won back your brother.
As robbymac said, "The emphasis of Matthew 18 is on restoration, not excommunication."
But if he does not listen, take along with you one or two others, so that every word may be confirmed and upheld by the testimony of two or three witnesses.
Trailady said, "Then, if the damaging behavior continues, I should take another trusted friend with me and approach the person again. (The point being to treat them with dignity.)"
At this point, I believe it is important to attempt to include someone impartial, someone who equally loves the other person because ganging up on them with more force won't help to produce reconciliation. It is possible at this point that you are dealing with different perspectives of the situation and adding objectivity could be helpful in coming to agreement.
If he pays no attention to them [refusing to listen and obey], tell it to the church;
Pam brings up an interesting point about this, "Barclay points out that it is premature for Christ to speak of the Church for it had not been born yet. Also, whole scheme of protocol is church-government and policy, something that was not in existence."
So what could this mean, the synagogue? the temple? the tribe? Maybe this means to make the "larger community" aware of the conflict at this time.
and if he refuses to listen even to the church, let him be to you as a pagan and a tax collector.
anonymous added, "..."so how then did Jesus treat pagan's and tax collectors?" Pam also said, "He welcomes in, not puts out, and that is how we are to treat tax-gatherers and pagans, with love and respect."
In thinking about the phrase "as a pagan and a tax collector" and the reason for its use, I wonder if perhaps it is simply pointing out that in a situation of unresolved conflict, true fellowship is broken. While you may continue to treat this person with love and respect, you will not be fully reconciled in the face of unresolved conflict.
I'll close with my favorite version of this passage from The Message:
"If a fellow believer hurts you, go and tell him—work it out between the two of you. If he listens, you've made a friend. If he won't listen, take one or two others along so that the presence of witnesses will keep things honest, and try again. If he still won't listen, tell the church. If he won't listen to the church, you'll have to start over from scratch, confront him with the need for repentance, and offer again God's forgiving love." (Matthew 18:15-17)