I live in a 50's era house that has breakers and a ground wire in every metal box of the house. The problem is they only used 2 prong outlets. They cut the ground wire short and wrapped it around the wire clamp screw inside the box to ground it. It's too short to connect directly to the outlet, or even get a wire nut on. I was told it would be ok to attach a separate piece of ground wire to the box, on the same or another wire clamp screw, and attach that to the ground on the outlet. Is this effective, safe, desirable, etc.?
Connecting a second ground wire from the clamp screw to the outlet should be safe as long as it is done right.
Professionals would have the equipment to test the outlet's ground connection properly.
You'd need to check local code/law to see if it is permissible. This depends on location. In the US you may be able to connect the existing wire to two new short lengths using a wire-nut and then secure the new wires to box and outlet respectively.
The simple answer is get "self grounding" duplex outlets. The typical design has a little spring plate meant to connect your grounded metal box to the outlet yoke, and thus to the third prong. Just install, test the ground with an inexpensive outlet tester, and feel lucky that the builder left you in such good shape:
If you are in the United States: surprisingly these are legal even in new construction. Beyond that, they're perfect for your retrofit. See the National Electric Code (NEC) section 250.146(b). Note that your ground wires may 16 guage rather than 14 or 12. That was OK at the time, and you're not required to change it now.