Hi Mark, I had this 'issue' at a clients site recently, i.e. soon to be ex-employee sending out stuff they should not and I helped the client look at solutions, However, they were advised that here in the UK, it was/is a 'grey area' legally to intercept a employee's e-mail hower justified the reason unless the employee has agreed to this in a contract, terms and conditions etc.
I Guess it falls into a similar catagory as secretly video recording employee's or taping phone conversations, opening mail etc, but you also have to protect intellectual property!
We ended up 'telling' staff that we WOULD monitor ALL computer use in such a situation (and modified contracts to say so) to hopefully put them off.
I also pointed out the many other ways a user could 'hotmail' info out the door without you knowing much about it.
Dave