XP and limited use

Right click My Computer and choose Manage
Expand to Computer Management (Local) > System Tools > Local Users and Groups > Users
Right click the user folder and select "new user..." and give it a name, roommate or whatever.
This is the point where you want to assign a password if you wanted. Select the option user cannot change password, who knows. Uncheck the User must change password at next logon.
Click close.
You're done. By default the new user should be a member of the Users group, the most restrictive local group. Login and test your software and internet

Remember, the same restrictions will also affect installing anything (some sites require special plug-ins) but will also subject your machine to the internet syndrome.  Make sure your firewall, antivirus, antidialler, etc. are all up to date and functioning under the new profile.  You can even restrict the additional user to only be able to log on during certain times, thus preventing use when you don't want it.

Additionally, I would strongly recommend creating an IMAGE of the current configuration so that if anything goes wrong in the future, you will at least be able to return to your current state (programs and files).  I use Ghost just for this.  I will be installing a different variation of dual access to a customer's PC next week, using a combination of Partition Magic, Boot Magic, and dual (hidden) booting techniques.  That way, what one person does has no affect on the other, and all files are non-accessible to the other party.  They have installation rights, can use the computer fully, without the danger of anything being damaged.  Of course, an image will also be part of the setup!  Better safe than sorry!

After defining a new user, you can create a policy to specify user rights. Open up the Microsoft management console by going to start, run, type "mmc", hit enter. Click add/remove snap-in, select the group policy snap-in, you can use this template to control which users have access to which windows functions.

Check this Software for limiting the internet connection.
http://www.softforyou.com/network%20control.php
Its a free trail for 15 days.

ty for ur comments. It however does not answer my query. I have already created a LIMITED user. What i need to know now is how  can i insert restrictions on
.. Deny new s/w installations &/or edit/modify already existing ones.
.. Allow access to a few, not all s/w I have on as an Admin (I do not see some of them here-)
..Allow net access (Do not see the login link in ltd mode !!)
..Antivirus/Zonealarm cannot to be tampered with .. yet remain active.

Can i do any of the above in the ADmin mode? How do i do all these.. What it means is that what is on stays on w/o access to modifications + I need 2 have tracebility of the ltd user activities ~!!

Thx once again..

".. Deny new s/w installations &/or edit/modify already existing ones."
A limited user cannot install, edit or remove existing software.

".. Allow access to a few, not all s/w I have on as an Admin (I do not see some of them here-)"
Change the user to an Administrator, reinstall the program, change the user back to limited.

"..Allow net access (Do not see the login link in ltd mode !!)"
Not too sure what you mean by "logon link" is you are referring to.

"..Antivirus/Zonealarm cannot to be tampered with .. yet remain active."
If you have WinXP Pro w/SP2 installed. Enable the Windows firewall as an Administrator. The limited user, again, will not be able to make any changes or disable.

<< Change the user to an Administrator, reinstall the program >>
Does that mean have to reinstall a pgm I already have on as an Admin for the ltd user ?? Wont it take more space

<< Not too sure what you mean by "logon link" >>
meaning i do NOT see a internet username/ password login box. Can i do this here so that the ltd user has net access.Also can I curb the net activity as in time spent ??

<< If you have WinXP Pro w/SP2 installed >>
Sorry no SP2.. had to uninstall it .. pain in the butt ~!

Can i also have restrictions on access to C drive..If so how ..

Recommend points to CRAYLORD

I agree with hunter points to craylord.

sweet. thanks folks.