I'm really annoyed about having to write this post because I believe the wrong info I posted is mainly the fault of Facebook's Bad Interface Design. And the worst part is that, because it's related to protecting your privacy, it could have serious consequences for some people.
In two earlier posts, Privacy Controls in Facebook Pt. 1 and Reader Question: Restricting Access to Wall Posts, I described how you can customize your Privacy Settings to specify which of your friends can/can't see what's on your Wall (on your Profile page). And I showed the section on your Profile Privacy Settings page where you can edit these settings—not surprisingly called Wall Posts.

But then yesterday, when a reader wrote me with a specific question related to privacy settings, I was doing some testing and discovered something surprising. I restricted one of my friends from seeing my Wall Posts and then typed her name in the box for "See how a friend sees your profile" and it still showed my Wall Posts. I asked my friend to confirm if she could see things on my Wall (in case the problem was with the "See how..." feature) and she said she could.
At that point, I thought I had discovered a major bug and did a Google search to see if anyone else had reported it and couldn't find anything. Hmmm...
Well, it turns out that the Wall Posts section doesn't apply to posts you put on your Wall—only to ones that your friends have posted. I confirmed with my friend that she couldn't see any posts from my other friends. (But she could still see comments from my other friends on any of my status lines, links, etc. that appeared on my Wall.)
I won't go into the whole story of how I found out this is the way it's supposed to work but I will say that Facebook does actually tell you this... IF you click on the little question mark next to the Wall Posts heading.

Now call me crazy, but I think if I say I'm restricting someone from seeing my Wall Posts, I'm expecting they're restricted from seeing ALL my Wall Posts, including mine.
So how DO you stop people from seeing your Wall Posts as well? Well, you'll have to do that in a few places. If you don't want them to see your status lines or links you post to other sites, then you need to use the Status and Links dropdown box on the same Profile Privacy Settings page.

Note: If you do customize settings on this page, make sure you click the Save Changes button at the bottom of the page to make them take effect.
If you don't want them to see your Photos or Notes or info from any other applications you're using, you'll have to change those settings for each one from the Application Settings page (get there from the Settings dropdown menu at the top of the page). For example, here is the Settings box for my Scrabble application, where I can restrict certain people from seeing anything I've done with that game.

You can also prevent having any stories from the application from being posted to your Wall in the first place, from the Additional Permissions tab.

If any of this isn't clear, please let me know. I'll be updating the earlier posts as well to clarify how this works. I apologize for any confusion or inconvenience they may have caused you.