The question is: is there an infinite group
whose nontrivial direct factors are all directly decomposable?
The answer is 'Yes'.
First I will explain why the answer is 'Yes'
to the analogous question for Boolean algebras (BAs).
Claim 1.
The following are equivalent for a nontrivial BA $B$:
- $B$ has an indecomposable direct factor.
-
$B$ has a direct factor of size $2$.
- $B$ has an atom.
Reasoning.
For the equivalence of (1) and (2),
a nontrivial BA is indecomposable
if and only if it has size $2$.
(For any BA $C$ of more then $2$ elements,
if $a\in C-\{0,1\}$,
then the complementary ideals $(a)$ and $(\neg a)$
are factor ideals for a nontrivial direct decomposition.)
For (2)$\Rightarrow$(3),
if $B$ has a direct factor of size $2$, then
we may assume that $B=C\times D$ where $|C|=2$,
and when this happens $a=(1,0)\in C\times D = B$ is an atom.
For (3)$\Rightarrow$(2),
if $a\in B$
is an atom, then the complementary ideals $(a)$ and $(\neg a)$
are factor ideals for a direct decomposition,
where $B/(\neg a)$ has size $2$.
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This is enough to show that any atomless BA has the property
that no nontrivial direct factor is directly indecomposable.
One can repackage this so that it is a statement about groups.
Claim 2.
If $A$ is a finite, simple, nonabelian group
and $B$ is an atomless BA, then the group
that is the Boolean power
$A[B]^*$ has the property
that no nontrivial direct factor is directly indecomposable.
[The Boolean power $A[B]^*$ is the subalgebra of the direct
power $A^{B^*}$ (where $B^*$ is the Stone space of $B$)
whose elements $f\in A^{B^*}$ are the continuous
functions $f\colon B^*\to A$ where $A$ is equipped
with the discrete topology.]
Reasoning.
The Maurer-Rhodes Theorem yields that if $A$
is a finite, simple, nonabelian group and $A_A$
is the expansion of $A$ by all constants, then
$A_A$ is a primal algebra. Saying that $A_A$
is primal means that it is finite and every finitary operation
$g\colon (A_A)^n\to A_A$ is a term operation of $A_A$.
The work of T. K. Hu shows that any variety
generated by a primal algebra $P$
is categorically equivalent to the variety of Boolean algebras.
The equivalence is the composition of two dualities:
Stone duality, $B\mapsto B^*$, composed with the
Boolean power functor $B^*\mapsto P[B]^*$.
In particular, this equivalence guarantees
that if $B$ is any BA and $P$ is any primal
algebra, then $B$ and $P[B]^*$ have isomorphic congruence lattices,
and under this isomorphism the factor congruences will correspond.
Thus, if $B$ is atomless and $P$ is the primal algebra $A_A$,
then $B$ and $(A_A)[B]^*$ have isomorphic congruence lattices
and corresponding direct decompositions.
Now pass from $A_A$ to $A$ by dropping the constants that were added.
This has some effect: the reduct $A$ of $A_A$ is no longer primal,
the algebra $A[B]^*$ has richer subalgebra structure than $(A_A)[B]^*$, etc.
But the congruences of
$(A_A)[B]^*$ and $A[B]^*$
are the same, and the factor congruences are the same.
This is enough to establish the claim. \\\