Yes, any user with Sysadmin rights could very well run xp_cmdshell. However, I think there is something missing to the author's notes.
1) Unless I'm wrong, there's no way to use xp_cmdshell to create a Windows Administrator account to wreck havoc on the PC. Sure, it can be used to delete files or edit files or find out what files are on the machine. You can even FTP to an outside source to "fetch" a virus unless there's a firewall in place blocking the PC from requesting FTP files. But, as far as I know, you cannot grant yourself higher user privledges using that command unless the PC is a very old OS. Think of this command as giving you access to ye ol' DOS prompt. They call it the Command prompt these days, but it still processes DOS like commands. Anything you could do in DOS (or almost anything), the xp_cmdshell command can do.
2) The author mentions hacking into the PC to use Admin privledges to get into SQL Server. If you're running the PC and SQL Server/SQL Server Agent off a normal user's account, they're not going to have admin rights over the machine anyway.
3) You'll notice the author mentions using things like "log on as a service" right on the account in question and that there are circumstances which require SysAdmin privledges. He is absolutely correct. You need to weigh your security needs verses your practical "every day work" needs. Only grant your logins the minimum permissions they need in order to accomplish their jobs. No more.
SQL Server security is not only SQL Server security. It is directly related to, and part of, network security and windows security. It is my advice that you never consider any of the three in a vacuum without the other two. If you have your security set up correctly between all three, you'll have a firewall (possibly two), strong Windows security with ordinary user accounts that have a minimum of needed permissions and the same with SQL server accounts. Traffic won't be able to get in unless you allow it, traffic won't get out unless you allow it (open / closed port designs, etc).
And, if you live in Perfect, like the Walgreens stores do, none of your users will leave their passwords lying around or give them to anyone else or try to wreck havoc on the network internally because they got torqued off... @=)
Unforuntately, Perfect is a hard place to find. You will find, that even if you have your network tightened up properly so no one can get in from the outside, you'll still have the wonderful internal security problem with people bringing things into the network (viruses, worms, friends who know how to hack and are waiting for the employee to get off of work so they can party) or just plain ol' John Doe who got fired and wants to screw the company over...
Did any of this help you or did I just confuse the issue more?
Catadmin - MCDBA, MCSA
"Just because I'm paranoid doesn't mean the universe *isn't* out to get me!"