Yes, I have seen many CS graduates who couldn't write C or C++ if their life depended on it. In fact, I have seen CS graduates who could explain the theory behind, say, parallel computing in detail, but could barely write scripts.
Knowing everything about painting doesn't make you a good painter :).
Yes, I've interviewed plenty of people with degrees from very prestigious Universities that evidenced no real programming skills, and a wonderful (truly) grasp of algorithms. Trouble is, the former is necessary on a day to day basis, and the second is always available from some contractor when you need it.
You've just shocked me! I went to art school and back in the day even if you studied say graphic design or fashion they actually taught you basic foundation skills which included painting and life drawing. Of course that was in the better schools, so maybe CS faces the same issues.
Knowing everything about painting doesn't make you a good painter :).