Blocking employees from deleting Internet Explorer history?!?

The employees are setup as users with limited access.   Pc's are running NTFS on boot partition(C:) and FAT32 on recovery partition(H:).

Interesting... I guessing there is an preference menu to change location?

KCTS:  The owners dont logon to the server so if we setup a log it would have to be easy to understand and in general, just show the URL.  I know logs such as Apache log list every file downloaded.  

The idea pf a proxy server is that they access the internet through it. (you can set this by group policy). The proxy server then controls which web sites they can and can't access ans optionally logs which sites they are visting. Wingate has the capacity to do this - it is completly transparent to the users.

Other alternative procy servers are
acFreeProxy - http://sourceforge.net/projects/acfreeproxy/
Squid - http://www.acmeconsulting.it/SquidNT/

Apparently IE History is stored in c:\documents and settings\%username%\Local Settings\History      However I cant access the permissions....   We are using IE 7.0.  Any more suggestions on changing permission.

You are going about this the wrong way !
You need to make sure that they access the internent through a proxy servry - that is the only way you are going to be able to centrally log who goes where and restrict which sites they can and cant visit

For simply preventing history deletion on a users PC you could configure a GPO to prevent deletion and even to move the history folder to a central location.

To prevent users from deleting history using a GPO try the following:

Create a GPO for users that prevents the changing of history settings, this will dim the settings in Internet Options:

In the GPO Editor find the following
User Configuration -> Administrative Templates -> Windows Components -> Internet Explorer

configure the Disable changing history settings object to enabled

This will prevent any users who have this GPO applied from being able to delete/clear their history in Internet Explorer.

Hope this helps
Derek

My problem is that we have a smart employee who we believe finds the storage location.  What keeps him from finding the location on the network and deleting pages.  When I restrict to read and modify (as opposed to full control) IE rejects the change.

IE needs to write and delete cookies - so you cant stop deletions - YOU NEED TO USE A PROXY SERVER !!!
The proxys will log the history on the server wehre the user can't get at it.
You already have WINGATE - so why not use it ?

You can also move the history file to another location that perhaps the users cannot clear (maybe that has readonly)

IE requires write premission (appartenly)... I like the idea of the owners opening the shared folder on the server and seeing the URL of the HOME PAGE.  

KCTS:  You are absolutely correct & that's a great backup for us, however they are more difficult to read through as they give too much information... But I will look into it.