Is it possible to isolate a network device from the rest of the LAN via its MAC address ?
Im familiar with creating a VLAN based on a tagged port of the network switch, but is it possible by recognising the devices MAC address ?
Yes, MAC based vLANs are possible. It depends on your switch's capabilities. You create a MAC address to vLAN map.
Here's an example of a Netgear and Cisco has it too, as well as many others I'm sure.