Exclude category from the_terms

Hi, I use a category for internal purposes and am trying to hide it from appearing on my site as a clickable link. I have managed to get 90pct of the way there. I use the following code in functions.php which removes the text / link from category section on posts / archives:

function the_category_filter($thelist,$separator=' ') {
	if(!defined('WP_ADMIN')) {
		//list the category names to exclude
		$exclude = array('Uncategorized','Update');
		$cats = explode($separator,$thelist);
		$newlist = array();
		foreach($cats as $cat) {
			$catname = trim(strip_tags($cat));
			if(!in_array($catname,$exclude))
				$newlist[] = $cat;
		}
		return implode($separator,$newlist);
	} else
		return $thelist;
}
add_filter('the_category','the_category_filter',10,2);

This came from http://wordpress.org/support/topic/excluding-categories-in-the_category and is old but works fine as far as I can see.

The problem is I have a static front page which pulls info from the blogroll to populate. Specifically looking at my structure it seems to use the_terms to grab categories as follows:

<p><span class="post-category"><i class="icon-pencil"></i> Posted in <?php the_terms($post->ID, 'category', '', ', ', ''); ?></span></p>

Codec link http://codex.wordpress.org/Function_Reference/the_terms

Is there any way I can filter this or alter the method the data is pulled in to stop the ‘Update’ category being displayed?