What is meant by the (slang) word "tool," when used to refer to a person?

Yes, tool in this context means that IBM can use him whatever way they choose, that he is obedient. It's usually used, though, in a context where the relationship is slightly unexpected, unwitting, or inappropriate. The tool lacks self-awareness. A soldier would not be a good example, then, since soldiers are not expected to act independent of their superiors’ orders.

We might say "Speaker John Boehner has become a tool of the Tea Party," which is remarkable because of the inversion of the usual relationship between the Speaker of the House and a faction of his supporters. (If you prefer the politics reversed, you can find people who say "President Obama is a tool of the Muslim Brotherhood.")

Update: For total tool (as opposed to mere tool), it is an insult as John Q Public suggests.

Generally, referring to someone as just a "tool" (with no qualifiers) is referring to definition 9 as seen at http://dictionary.reference.com/browse/tool?s=t:

Slang: Vulgar Penis.

So it's about the same as calling them a jerk, a dickhead, and so forth.

Referring to them as "a tool of X", on the other hand, does have the implication that you refer to: they are a loyal instrument that can be counted on to do X's bidding and to act in X's interests at all times.

You're asking about two separate definitions.

He's a total tool can mean a prick/jerk/ass/dork/nerd and some other offensive words that I'll leave to your imagination. The meaning would depend on the speaker and what the person does that makes him a tool. It's a pejorative generally reserved for males.

On the other hand, you're correct regarding He is a tool of IBM. It does mean that he's blindly loyal, but it can also mean that he's a prop or a puppet being used by IBM, suggesting he's either under control by or manipulated by IBM. In other words, it's a metaphor suggesting he is used by IBM much like one might use a wrench to tighten a bolt.

I am not saying that tool cannot be used for being a jerk or prick but we would commonly use it instead of dumbass or someone who is lacking intelligence.

Urban dictionary:
One who lacks the mental capacity to know he is being used. A fool. A cretin. Characterized by low intelligence and/or self-steem.