Not sure why the second sentence "blows their case right out of the water", Khat. After all, it is talking about the people who say that there is no God. Ironically, I have heard more people use this quote to support their decision to disbelieve in God, than anyone else.
OK - let's consider the scripture:
"The fool hath said in his heart, There is no God. They are corrupt, they have done abominable works, there is none that doeth good".
Psalm 14:1
I've never known a believer use the entire verse. They always omit the second sentence.
Why?
Perhaps they'd always seen the first sentence quoted and genuinely had no idea the second sentence even existed.
However, I guess Christians are aware of the second sentence and maybe they like to put the billions of people who don't believe into one category as corrupt, abominable and doing no good.
Yet, do Christians honestly believe that someone like Gandhi, did no good at all? What do you find corrupt and vile about his works?
Bob Geldof is a well-known atheist. How many millions of lives has he saved through his work and effort?
If Christians really believe that great humanitarians like Andrew Carnegie and Bill Gates are corrupt and vile and have done no good then all I can say is that they've been twisted and distorted by theirr own beliefs.
I'd say that any believer who agrees with the second sentence is sick and had better be prepared to demonstrate that every unbeliever is corrupt, abominable and incapable of doing anything good.
Any believer who doesn't agree with the second part has a problem; They admit that the Bible is not always right, in which case they are not required to accept any of 14.1
Here's another scripture, this time from Alan's much vaunted New Testament:
"But the fearful, and unbelieving, and the abominable, and murderers, and whoremongers, and sorcerers, and idolaters, and all liars, shall have their part in the lake which burneth with fire and brimstone."
Revelation 21:8
To summarise:
In the first scripture, we're taught that unbelievers are corrupt, vile abominations that never do good. In the second, the love of Jesus tells us that unbelievers are abominable, all liars, and the moral equivalent of murderers and whoremongers.
And we all know how the believer's violent and judgemental god feels about such people, don't we? It must be good and right to feel that way, too, if Jesus does - right? Seems that in order to please him, Christians want to be just like Jesus and hate who he hates. Right?, right? The vile and abominable need to be hurt, don't they? It's a biblical principle.