Yes, it is possible to store arbitrary data in the block chain. The block chain can store text, which in turn can be used to represent various forms of data.
You have to understand that data is just data. It only means something when put together a certain way, sometimes for intentional meaning, sometimes hidden meaning. Also understand that because binary (1's and 0's) can be represented many ways (like tapping your feet timely, or etching tick marks somewhere) it's possible to store information on basically anything in almost any medium.
There is in fact ascii art hidden in the block chain of Ben Bernanke and Len Sassaman:
http://pastebin.com/raw.php?i=BUB3dygQYou can also put more nefarious text there too, but there are many ways to be nefarious.
If you don't want people to be able to store possibly nefarious data with you then you have to do much more than stop running a full Bitcoin node (note you can use Bitcoin without storing the block chain, e.g. blockchain.info).
Most Internet users accept browser cookies, which are files that allow sites to store text info on your computer. You can put links to child pornography, ascii art, encoded picture files etc. in cookie files just as you can in the block chain. The usual size limit on cookie files is 4KB. The image below is 2KB:
So if you want to be sure you're not inadvertently storing information in a form you're not aware of you better stop using any cookies (or check every one in countless formulaic ways). But the fun doesn't stop there. Most browsers also store a history of sites you've visited. Guess what? The Internet runs on
text as in Hyper TEXT Markup Language. Any web address you visit can append an arbitrary amount of text data to the URL after the ? as in goodsite.com?arbitraryhiddenchildpornencodedtext so you have to also stop letting your browser store any information on sites you visit.
Your browser also downloads Javascript, Java, and Flash files to name a few things often downloaded while viewing ordinary Web pages. Any of these can be used to store arbitrary data on your computer.
Just as there is cocaine on physical cash many people are unaware of, so to are there ways to "dirty" things people usually consider clean without them even being aware of it. That didn't start and won't end with Bitcoin.