You have it right but backwards.
If he holds (or held) an Indonesian passport he CANNOT be a US citizen. Some countries do recognize dual citizenships, the United States does not.
...Obama now sets a precedent that anyone who hates this country, from Osama Bin Laden to Kim Jong Il, can have a child with an American woman and that child can be President.
...Obama’s defeat of the dual nationality issue, in both the courts and the media, means that the President’s parents do not have to be US citizens. If that is true, then the natural born citizen requirement in Article 2 Section 1 of the Constitution is basically rendered meaningless.
But I also heard that the Indonesian Government did not allow dual citizenship, either. I don’t know myself, but it seems that there is more than one scenarios still in need of explanation.
Did her relinquish the US Citizenship to get an Indonesian citizenship, or did he and his step-daddy merely mis-portray him as an Indonesian citizen to get him into school, and if so, how did that passport come about?
Are we certain he had a passport from Indonesia?