Michael Alan Crooker bought an HP computer running Windows XP and Internet Explorer from retailer Circuit City, and said that he was assured it would protect his privacy.
But when he was arrested on firearms charges, police cracked the PC's security and found his internet surfing history, along with videos of himself and his girlfriend engaged in sexual acts.
Crooker used a common security utility known as DriveLock which shuts down the hard drive if a password is not given.
But the FBI were able to bypass this by taking a mirror image of his hard drive which revealed his complete internet history, despite Internet Explorer being set to delete all records every five days.
"Any day beyond those parameters is supposed to be permanently deleted and is not supposed to be recoverable," Crooker stated in the lawsuit.
He added that he suffered "great embarrassment" over the details and other information found on the computer.
Crooker is now suing Microsoft for US$200,000 and claims to have already reached settlements in similar cases with HP and Circuit City.
The man is currently residing in a Connecticut jail awaiting trial for selling illegally modified firearms and possessing bomb-making equipment.
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