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Does Sequential Workflow run with admin privileges or user's privileges who run a workflow?

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Workflows can be run as admin, user or a workflow user called by a user.

All can be set in central admin to restric the access of workflows. If you want you can also have runwithelevatedpriv:

If an impersonation step is encountered, the declarative workflow is run in the context of the workflow associator. The default workflow tasks respect SharePoint permissions by impersonating the user who started a workflow when the workflow is run

also this outlines the Required permissions to start a workflow:

Required permissions to start a workflow

In addition to preventing the elevation of permissions in the code, list administrators can restrict the permission level that is required to start a workflow during the association process. Administrators can select either of two permission levels to start a specific workflow association: Edit Item or Manage List.

The default setting for associating a workflow is to allow users with Edit Item permissions to manually start a workflow. This means that any authenticated SharePoint Server 2010 user on the list who has Edit Item permissions can start an instance of this workflow association. If during workflow creation the administrator selects the option to require that the user have Manage Lists permissions in order to start the workflow, only list administrators can start an instance of this association.

Because workflows are designed to be used by standard contributors, most workflows do not require the restriction to Manage Lists permissions. However, administrators can use this setting for workflows such as a document disposal workflow, where the administrator wants only certain people to execute the disposal actions.

http://technet.microsoft.com/en-us/library/ee428324.aspx

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Careful with the use of the phrase 'runwithelevatedpriv', this means something completely different to SharePoint Developers, but in the context of Workflow, it means (as you quoted) the person who created the workflow, who may or may not have administrative privileges on the site. –  James Love Aug 26 '12 at 9:02

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