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If its an in house employee is there another employee that you could compare the work load too? Or does the work they are doing seem to be reasonable for a day? If the employee finds out and there is a productivity issue it will probably get worst. I don't think spyware is the way to solve it. Sit down and start talking with the guy. Tell him you are concerned with his productity. If it still continues talk to him again, this time put it in writing and give him a copy and ask him to sign it. Tell him when you are finished talking to him you want to review his productivity again in 3 weeks or whatever time length you set. Then do it again the 3rd time. Now you have everything on paper that you need to fire him if the productivity doesn't get better. But more than likely the guy will smarten up after the first time you put it in writing.
Set deadlines for him and ask him to schedule his work. Also if you are the guys boss then you should know how long it takes for him to do his work. If you don't and he knows that.
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