> In the opinion of the court, a company has the authority to demand that their employee hands over the contents of his personal computer?

This is absolutely the case with at-will employment, and maybe even with an executive or officer directly involved in a case even without that (and an executive likely has a contract that puts them under something other than simple at-will terms.)

> That doesn't sound right... please, somebody tell me the US judicial system isn't that retarded!

If you don't like the law, that doesn't make the judiciary retarded for correctly explaining it.