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I installed LAN messenger in my office machine from here. Can my network admin monitor the private chat or file transfer activities between me and my colleague? If the admin can in fact monitor the activity, then can anyone suggest any other messenger that is more secure?

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The Features page on the website you provided says:

Secure messaging for privacy.

All messages are protected by AES encryption with RSA as the key exchange mechanism.

So you should be fine

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It should be noted that the admin could possibly notice the increased network traffic (depending on what files you are transferring) and/or (if they're using some kind of deep packet inspection) the unidentified packets transmitted by the chat program. However, as long as you don't break anything, it's unlikely that anyone will bother analyzing the network traffic closely enough to notice anything. – Nov 26 '13 at 3:21

The Short Answer would be yes, Some remote monitoring tools will able to track down remote users monitor screen where it prevents the unwanted usage of office system turning to personal system.

For e.g tools like activity monitor

Activity Monitor server can be installed on any computer in the entire LAN. Remote spy software (Agent) is a small client program that is installed on all computers on the network you want to monitor. It can be installed even remotely from the PC with Activity Monitor on it or via Active Directory Group Policy in a Windows domain. Any computer in the network under control can be spied remotely. You may tune this employee monitoring software so that it will record activity on all networked computers. This information can be later used for the deeper analysis and advanced report generation.

In market there were many remote spy tools are available which makes the access to admin for looking/spying the monitor of client machine .

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