These days we are told that all our computers have been installed an employee monitoring software
Why should they not in your opinion?
How to stop my boss form watching us?
Why do you seek to do that ? What are you doing at work that you should not be doing ?
which is strong and powerful enough to record all our computer activities when our computer is running, including email, websites, applications, screen snapshots and instant messages.
That is their intent as you are using an employer's machine, in work time and using their electricity and internet access;therefore not working but using work time for your own convenience !!
First I do not believe there is such metamorphic software and I try to download and install in my own computer.
I suggest you need to be careful as you may end up getting yourself infected and /or keyloged !!
To my astonishment, it does successfully record everything in the server side
You may not know it but so does your ISP know which sites you visit on your home computer and you have the privilege from them of so doing; they too can ban you or restrict your internet access if they so wish if, in their opinion, you do abuse your internet access
I do feel insecure when I know I am under watching the whole day.
One might ask why as I suggest you may then be doing something you should not be?
How to stop such situation?
Stop using the employers computers for anything that is not work related
Is it legal for our company to do like that?
Yes it is and I believe than when you signed up to your company and to get a user-name and password you were also told that all internet use was monitored and recorded?
Stop using the work computer for anything not work related ...and if you really feel you cannot do that then think about getting another job?