It's sad that he uses "That's retarded" as a way of disparaging something. Because from my own experience, that is a word he has experienced personally, used against him. He knows from personal experience that it hurts and so he now uses it to hurt others.
If you can, sit him down and ask him what he understands it to mean, and why he uses that word. I would also ask him under what circumstances he learned it, and do your best to make him see that he is NOT retarded.
Do try and read "The Explosive Child", there are tactics in there that I think you need to see. It will help you find other ways to view your stepson. It's also important to keep an open mind on the diagnosis because often it can be so subjective. As the child gets older some aspects get more obvious, others less so. Having a detailed history is always useful, but how he presents now can make it easier (or harder) to pinpoint the diagnosis. We have had cases here on this site where a diagnosis went through an almost 180 change to the ultimate beneift of the child and the family, once they got onto what seems to be a more accurate track.
A kid with Asperger's can (often is) depressed, but that's generally because struggling with this can be depressing to the child, especially if it's not properly diagnosed. It's not uncommon for the depression in an Aspie kid to be mistaken for a down period in BiPolar (BP). Similarly, a kid who is genuinley bipolar can also have other things wrong, that are slipping under the radar. It's always worth challenging the diagnosis at regular intervals, to test it, make sure it's correct and you're all on the right track. Peace of mind, if nothing else. Hence the recommendation for a neuropsychologist assessment.
Marg