>I have a quandry on my hands. I have seen evidence that a former co-worker is using source code developed while we were working on a project.
>

It really depends on the agreement you had with the other customer. On the projects I've worked on the customer gets all the source code to the program while I still retain ownership of the code. I can use any of the individual components however I want, just not in total. For the customer it's generally a win-win situation. They get the source code and I can reuse components which helps me reduce development time and cost. Components I've reused from other projects helps them reduce costs on their projects too.

I don't see a moral dilemma unless you've specifically agreed to not reuse ANY components written for their application in any other applications. This isn't just the case in software development. I know a lot of mech. engineering shops that work the same way.

HTH