Basically Diacetyl is a product of yeast fermentation. It gives the beer a buttery/rancid taste and so should be removed with a simple 'diacetyl rest'.
To perform a diacetyl rest simply leave the beer in the fermenter for a few days once primary fermentation has finished. This gives the yeast a chance to 'clean up' the by-products of their fermentation including the diacetyl.
There is a test you can do to check whether the diacetyl rest has done its job:
Pull a sample from your fermenter and split it into two covered containers. Refrigerate one and heat the other to 140°F for an hour, then taste them both. If they taste the same, you're ready to rack your beer out of the fermenter. If you can taste butter in the heated sample, your yeast is still at work, and you should give it another day or two.
• Heat one sample from your carboy for 10-20 minutes @ 160-deg via a double boiler (make sure the sample has aluminum foil over the top)
• Keep a second sample at room temp
After heating the one sample for 10-20 minutes, smell both. Does one smell like butter? If neither smell like buttery diacetyl then there's no worry of it being present. If the heated sample smells and the room temp doesn't then leave the beer on your yeast longer (diacetyl rest). If they are both positive for butter it either, like the case above, needs more time on the yeast, or you might have an infection (however, RDWHAHB).
Check out "Yeast" by Chris White and Jamil. It's a great read.
Would Diacetyl present in the beer produce a slippery, soapy feel on the tongue? Do you know is it possible to perform this test on beer that has already been carbonated? (granted its too late to give it more time in a fermenter with the yeast, but would one observe the same results, i.e. the buttery smell?)