Under certain circumstances we may narrow the range of what is being displayed, but the goal is usually related to tracking down a system problem. We conduct Service Monitoring all the time. Staff members who engage in service monitoring keep any information learned confidential. Searching is the most serious act that we may use in order to catch a cracker. I have no recollection where we have sanctioned a search of a person's files in order to prove wrongdoing of any kind either.
Many universities have very different statements about searching.
They feel that the resources belong to them and they have the right to search the system for such things as pirated software, pornography, or cracker software. In general permission is required from a senior MIT official. Any information viewed this way is kept in strict confidence. MIT is always subject to being served with Court Orders and Subpoenas. When served MIT may have no alternative but to cooperate with the issuing authorities.