A Sue is, by definition, er... there are several definitions, all too lengthy to post and deconstruct in the short time I have remaining before work.

Some characteristics, instead:
-Authorial Self Insert
-Uncannily Good-looking
-More Powerful than really possible
-Center of the Plot
...etc.

I've seen implausibly entered characters who were altogether unbelievable, but the author actually spent some time on their personality and gave them a few weaknesses, as well as putting together an actual Plot. A Sue is almost always a hallmark of poor writing ability-- someone who can't write a decent character and has trouble writing a story with good details is... well, the average fangirl. But poor writing ability is not always a hallmark of a Suefic, and sometimes, very rarely, someone pulls it off. I should clarify-- at least 95% of the stories out there are absolutely terrible.

For example, JulyFlame just started a roleplay where all of the characters are supposed to be Sues/Stus. It's one of the most fun, intricate, and mind-bendingly thoughtful things I've done in a long time. (It's located here, if you were wondering.) Whether or not a 'Sue is a terrible character depends entirely on the author. If the author writes Sues/Stus because they have no imagination to write more realistic characters, the story will be terrible. If the author is a good author who writes Sues/Stus for fun, the story might not be absolutely terrible.

I am, however, inclined to say that legends such as the Arthurian tales have different rules for characterisation.
I will agree, though, that Galahad is a total and utter Stu.

(Though I loved Python's Galahad to pieces)

It's all a matter of persaonal definition, I think. In my book, a Mary Sue is a character who steals the show by way of being excessively pretty/powerful/adorable/angsty/et cetera/all of the above. The ridiculous over-the-top-ness of the character is a major part of that definition, but not all of it. If such a character appeared in a story but didn't steal the show, I wouldn't be so quick to label it a Sue - it might be, but I'd want to judge each such case individually.

It's not a foolproof system - the matchmaker Sues who exist to force canon characters into OOC relationships may well be an exception - but that's how I go about it.

So to answer your original question, Charlie, I'd say not - I agree with Aster; if a Mary-Sue-like character were to be in a good story that isn't deliberately playing on the concept, I wouldn't call it a Sue - not outright.

In my opinion, if a story revolves around a single character, then that fact ruins both the story and the character.

An over powered character can be use to drive the plot, but only if they are not the main character, otherwise the story becomes boring usually. Having them as a single enemy against a team works well.