I have gone through these steps to block facebook.

http://www.youtube.com/watch?v=0S8QJHz2Rvo

Searching for facebook on google is blocked.
http://www.facebook.com - blocked
https://www.facebook.com - allowed
http://69.63.181.12 - blocked
https://69.63.181.12 - allowed

Any assistance as to why https connections are not subject to the CSM?

HTTPS connections do not use the URL in the page request, they just send to an IP address (the alpha URL is encrypted within the SSL connection). You therefore need to block the typical IP addresses that facebook might use, or block https altogether if you don't need it.

I have the same problem, would be great to know if this gets sorted?

easiest way is to just add an NS entry on your dns server for the domains

facebook.com
fbcdn.com
fbcdn.net

to 127.0.0.1, and the requests will time out.

people can get around by using host files etc. but will fox most, you can apply further settings as suggested in previous posts on the router as well to reinforce it a bit.

or, you could do it properly and get a proxy server look into squid which is perfectly solid and open source.