finput = open("./Test.csv", "r")
while 1:
  line = finput.readline()
  if not line:
    break
  else:
    user = line.split(delim)[0]
    direction = line.split(delim)[1]
    duration = line.split(delim)[2]

    durationz = 0:00:00
    for k in duration:
      durationz += k

Best How To :

Use datetime.timedelta() objects to model the durations, and pass in the 3 components as seconds, minutes and hours.

Parse your file with the csv module; no point in re-inventing the character-separated-values-parsing wheel here.

Use a dictionary to track In and Out values per user; using a collections.defaultdict() object will make it easier to add new users:

from collections import defaultdict
from datetime import timedelta
import csv

durations = defaultdict(lambda: {'In': timedelta(), 'Out': timedelta()})

with open("./Test.csv", "rb") as inf:
    reader = csv.reader(inf, delimiter=delim)
    for name, direction, duration in reader:
        hours, minutes, seconds = map(int, duration.split(':'))
        duration = timedelta(hours=hours, minutes=minutes, seconds=seconds)
        durations[name][direction] += duration

for name, directions in durations.items():
    print '{:10} In    {}'.format(name, directions['In'])
    print '           Out   {}'.format(directions['Out'])
    print '           Total {}'.format(
        directions['In'] + directions['Out'])

timedelta() objects, when converted back to strings (such as when printing or formatting with str.format() are converted to the h:mm:ss format again.

Demo:

>>> import csv
>>> from collections import defaultdict
>>> from datetime import timedelta
>>> sample = '''\
... Johnny,In,0:02:36
... Kate,Out,0:02:15
... Paul,In,0:03:57
... Chris,In,0:01:26
... Jonathan,In,0:00:37
... Kyle,In,0:06:46
... Armand,Out,0:00:22
... Ryan,In,0:00:51
... Jonathan,Out,0:12:19
... '''.splitlines()
>>> durations = defaultdict(lambda: {'In': timedelta(), 'Out': timedelta()})
>>> reader = csv.reader(sample)
>>> for name, direction, duration in reader:
...     hours, minutes, seconds = map(int, duration.split(':'))
...     duration = timedelta(hours=hours, minutes=minutes, seconds=seconds)
...     durations[name][direction] += duration
... 
>>> for name, directions in durations.items():
...     print '{:10} In    {}'.format(name, directions['In'])
...     print '           Out   {}'.format(directions['Out'])
...     print '           Total {}'.format(
...         directions['In'] + directions['Out'])
... 
Johnny     In    0:02:36
           Out   0:00:00
           Total 0:02:36
Kyle       In    0:06:46
           Out   0:00:00
           Total 0:06:46
Ryan       In    0:00:51
           Out   0:00:00
           Total 0:00:51
Chris      In    0:01:26
           Out   0:00:00
           Total 0:01:26
Paul       In    0:03:57
           Out   0:00:00
           Total 0:03:57
Jonathan   In    0:00:37
           Out   0:12:19
           Total 0:12:56
Kate       In    0:00:00
           Out   0:02:15
           Total 0:02:15
Armand     In    0:00:00
           Out   0:00:22
           Total 0:00:22