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<a href="http://www.laborresearch.org/story2.php/98">This article</a> [<a href="http://www.laborresearch.org/">LaborResearch.org</a>] might clarify things a bit for everybody.
It's very hard to find an employer guilty of privacy violation when the situation involves "corporate assets" (the computers, the Internet connection, the paid employee time). According to the article, email is still up in the air, since the courts have not definitively established email as a form of either oral or verbal communications.
Good luck, and please let us know how it pans out. Also, if your suspicions of this guy are so strong as to warrant keystroke loggers and the like, maybe s/he is worth dropping...
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