I have never tried one of the hardware keyloggers so I can't say much about them other than I know that they are out there. I would think one would be pretty obvious, the ones I have seen on the web plug inline with the keyboard cable so simply looking at the back of the computer would give it away.

I have used a software product on my child's computer. The program is made by SpectorSoft and is known as eBlaster. It is hidden software that sends recordings to you remotely by email. This is really handy for me because when I am on the road I can use my Blackberry to check on what my child is doing on the Internet.

If you need it I believe they also offer a remote installation feature as well. They have some other products as well, network monitors, Mac software etc.

AFAIK there is nothing that can detect their software, again I can't speak for any other brands. They have a description of their products at: www.spectorsoft.com