The problem is the arrangement itself. They hire a contractor/consultant to get some value out of you. What they should be doing is monitoring if they are getting the value. Hours spent is not value.
If I was in your situation I would ask them if they want to discuss the arrangement, the value and the guarantees they are getting. I would suggest we can agree on zero notice period and no questions asked termination policy (of course symmetrically). I would also want to discuss how they will know the work progresses so that they are satisfied they are not being robbed. If that wouldn't work I would part our ways and find other job.
As to installing spying software that should be absolutely out of question. If you agree, you are just enabling them to do the same for other people.
Listen, there is no value in having spying software on your computer. Will you work more diligently when you know you are observed? That only works for menial jobs, but if your job is to do anything complex you are just burning time for no reason.