The option "Hide Ads when user is logged in to WordPress" works fine with the ads in the posts and pages, however it has no impact on the sidebar widget.
My blog is here
Read carefully: there is an optional code for what you want.
That should do it! :-)
*Please note, it currently has a bug that still displays the widget ads when the widget is in the header area. http://wordpress.org/support/topic/warning-is-not-working-in-header-widgets
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