1. It's from Time.com's archive. It was originally written in the 1970s. Actually, it's older than me.
2. On appeal, this ruling was overturned.
However, the article raises some interesting concerns. One of the reasons the article has been making the rounds so persistently, and for several days now on Twitter, is that it still sounds like it could happen today. Ignore the date, and it is still perfectly believable that some Christian fundamentalist judge would jump to the same conclusion, using the same crazy argument, and conclude with the same result. And it would still get overturned on appeal, probably. But it doesn't sound like it had to be from nearly 40 years ago. It sounds like it could be last year, or even yesterday. We have made little progress on the issue of atheist acceptance in society in all that time.
Contrast that with a black couple adopting a white baby, or vice versa. A similar article would immediately be assumed to be archaic. No one would believe such a thing because there are mixed race couples everywhere, our President is mixed race himself, Madonna... foreign adoption of children not of the same race as the parents is extremely common. It would immediately be seen as something from the 60's or 70's. No judge would dare issue such a ruling. (Well, or else the judge was insane! and an anomaly.)
But when it comes to atheists, when 51% would not vote for an atheist for President, when atheists are the most likely to spark a parental freak-out if kids bring them home as sons- or daughters-in-law, when Christians are still offended by our mere existence... no, nothing has really changed. Our numbers have changed, and among the young, as with gays, we are more accepted, but in the halls of power... we are still hated and feared.
It's because of that that we must work relentlessly and long so that when this generation takes over the reigns of power that real change takes place, so that we no longer have a genuine fear that the court might take away our children; so that Christian America is just as outraged as we are.