Before you get started creating multiple users, you first need to get into the File Sharing control panel and type in an Owner Name and Machine Name. If you choose to limit the access of the user, you have very detailed control. For example, one tab on the control panel lists all applications installed on the computer. You can then choose only the applications you want that user to access. If so, you can further create a specific list of discs that the user is allowed to access.
Individual users can also create their own private documents.
When you restart the computer, you're presented with a list of users. After you select one, you're prompted for that user's password. The computer then adjusts itself to the setting for that user. I'm sure some skilled hacker could figure a way around this system, but your kids won't be able to. If you want that sort of security built into your operating system, you'll have to consider getting Windows 2000.