To add or not to add graduate advisor - Ethical question - (Jun/16/2009 )

Hello.
This is my first time writing. I'm very happy to have found this forum. I have been googling this issue for 2 weeks now, and have found no real answer to my concern. I hope the wise of this forum could offer me advice that could shed some light into this matter, and guide me to a path of peaceful resolution.
For comfort reasons please excuse me for addressing myself in third person.

Once upon a time, there was a graduate student that developed his own method and brought that method to his advisor's lab. As a graduate student, he was on a fellowship during the entire time he worked in his advisor's lab. Advisor and graduate student were from different fields, but the project involved the "merging of both fields" e.g., student was biology and advisor was mechanical engineer. Student's model helped validate advisor's system or instrument.
As the thesis project progressed, the focused shifted to strictly biology. Time ran out, and so there was no research conducted on advisor's system. Student graduated, published thesis as per university standards and moved on to another lab for postdoctoral work.
Student's biological method was never published in a journal, but student wrote a manuscript with intent to publish while a graduate student, but again time ran out and student graduated. Current postdoc lab (a collaborator of grad advisor) is interested in student's method, thus reason for hiring student in the first place. Student is currently on his own postdoc fellowship as well. Student told old grad advisor that he will submit his method for publication, since he never got the opportunity to do so while a graduate student. Former grad advisor suggested some journals for publication. Former grad advisor made no other contributions (data, funding, techniques) to the method or research mentioned in the manuscript.

Here's the question:
Because the method was never developed in grad advisor's lab, is he still entitled to be the last author (corresponding author) on student's paper even though student has since graduated and is now a postdoc, and the paper is being submitted after graduation?
Furthermore, grad advisor now wants student to spend a little more time with his collaborator (postdoc supervisor) and use method to generate data to add collaborator's name to paper.
Although student (postdoc) is excited that method is good enough for other scientists to want to be included in his paper, student is starting to believe that grad advisor wants student to give others free piggy back rides. In other words free authorship, because there is also another collaborator of grad advisor listed on the manuscript at his request, simply because student "spoke about the research" with him.

Of course at the early stage of his career, student does not want to burn bridges, but student does not want to give free back rides either at his expense.
Are these incidences common practice in today's scientific community? Or is this an isolated case?

I thank anyone deeply for their honest advice and comment.

On the first part of it -- if you had written the paper for publication on your last week in your former lab, where it sounds like most of the work was done, who would be authors? That part shouldn't change.

On piling on authors -- this shouldn't happen, but occasionally it does. It is bothersome, but as long as you're first author and your satisfied with who ultimately is senior author, does it really matter? If the collaborator is going to generate some data that will contribute to the paper, so much the better...

also, corresponding author can be any one of authors, it is not limited to last author (it is often first author). so, go ahead and make yourself corresponding author, just don't forget to get signatures from all of the other authors.