Restricted access to Windows

You can use a program called Deep Freeze. Here are a few sites that can give you a little more information http://www.faronics.com/html/deepfreeze.asp ,
http://www.newcastle.edu.au/services/ets/deepfreeze.html ,
http://www.amtsoft.com/deepfreeze/

Well, normal Users on a typical XP box have rights to the Program Files folder, and that's where all programs default to install into.
An idea (it might be a bad idea, but something to try on a TEST box!) is to make a group on the local machine, add all users that you want to restrict into that group, then go into the Security permissions for the Program Files folder and Deny access to the group.
Then when a user tries to run a program based out of that folder, they will be rejected.
Then you would clear the desktop of all icons except for a shortcut to your network-based app, remove all other program shortcuts from the Start button (using Local Group Policy), and there you go.
Probably other ways to do this with Group Policy, but I'm a little rusty with GP.

Hi

I think Mr Moore's answer is good, except that you should allow the user(s) access to C:\Program Files\Common Files and then deny access to the those you want to restrict.

Good luck