I assumed this happens on any employer machine anyway. If not specific mouse movement and keystrokes then file access and connected devices. I honestly don't understand the outrage.
The point I'm making is, there is a difference between what contract explicitly says, and what is implicitly understood due to practical limitations of the real world we live in. When the real world changes so does the effective implementation of contracts, even though the contracts themselves don't change. The problem is, by the time the world has changed against your favor, you might not have the power to demand an adjustment to the already signed contract.
The equipment is worth thousands of dollars and the company has a fiduciary responsibility to track their assets. Of course they are going to install spyware on their equipment and make it crystal clear that the employee has no expectation of privacy while using it.