I know that my company routinely checks applicants' facebook pages. They figure that if someone puts it out there, then it's fair game.
It started, approximately, when an employee "friended" her boss. The employee was not all that smart, and a real party girl. One day, after a weeknight bender, she listed her facebook status as "Sleeping". Curious, her boss went down and checked...... and now she's an EX-employee.
Sez me, however, asking for passwords is going too far. I'd likely tell the prospective employer to get stuffed. Fortunately, I hate Facebook, and all other social networking -type things, so I've nothing to worry about personally.
If you hate it so much, why are you posting on FR?