It seems a bit far fetched that Microsoft has thousands of servers you can access publicly via default passwords.

They raided his home and took all of his stuff, but didn't arrest him? How is that legal? Shouldn't he get his stuff back if they don't have any case within X hours for prosecution?

I'm sure he's playing the victim here pretty hard because he states that he doesn't believe he has done anything wrong and yet has tried selling a Durango development kit on eBay in the past. He's probably done a lot more than that to prompt an FBI agent across the world to his doorstep.