User rights on Win2K

Have two additional users to the administrator on Win2K machine.
Users, as PowerUsers, have loss of application cababilities. The Picture It app replies with an applet demanding administrator rights. The CDRW software doesn’t see the CDRW drive.
I installed the ISP on both users and it works fine, as well as all the MS office products. They required the disk upon initial opening, but work fine.
Change them back to administrator, and everything works properly.
I need to set this machine up so that one user can not access any of the other user’s files.
Am I going about it in the wrong way, or is Windows not acting as it should?
Is it not possible to run similar applications?