Limited account can modify it's home folder, but can not modify any other folder such as the Windows folder, Program Files folder. They can view any folder except other user home folder if the other user decide to keep it private.
What Windows OS are you running? If you run XP home you are limited to what you can control, XP Pro and 2000 Pro have better NTFS file permission setting.
I don't know any program that would put a password like that. But you can put a password on the BIOS, set that harddrive first and when someone need to boot to the CD they would have to get into the BIOS and set the CD to boot first.