Well they can easily sniff your traffic and yes they can see all those pr0n chicks you talk to on AOL
Dunno I use it at work quite a bit and never had any problems

We have multiple layers of net watchers and haven't had too many problems... but we're also much larger.
Do you work for a big company that can't track everybody or do you work for a smaller company where the IT is guy is bored and can do things like that for fun?
oh and umm no major IM software is "safe" they're all full of holes

however, typically if you watch who you talk to you should be ok.