System Restore... um, doesn't work like that. On a number of levels.
Let me give you the super-short version before I propose a better solution.
- System Restore for the most part leaves files alone, so if your users fill up the machine with bookmarks and downloaded files this won't help.
- System Restore only fixes changes made to the registry, to system files, and changes made through the system installer interface (a lot of programs work this way, but not all.) Though it can often repair malware, especially malware that relies on the registry to load itself, it won't fix everything.
- It won't stop your users from doing anything nasty if they're explicitly trying to do so.
The reason Google is being unhelpful is because this is a solution which Does Not Work(TM).
Now, as for repairing the problem entirely, you want to look into Policy Manager. This lets you enforce all kinds of crazy stuff on user accounts, from running unsigned executables to setting bookmarks to setting files to even right-clicking, anywhere, for any reason. You can even deny access to the filesystem if you're feeling saucy. You can even administrate these policies on a LAN-wide basis, so you won't need to make changes to each machine manually.
The downside is that as far as I know, Policy Manager is only available on XP Professional. If your machines are running XP Home, well, you need not to be running XP Home.
Alternatively, you could put Ubuntu on the machines. Very fine-grained permissions control is possible, and the inherent resistance to malware is a nice bonus. It'd work swimmingly for something like a library machine, and might even work for a more specialized purpose - a lot of Windows software can be run in Ubuntu trivially easily now thanks to the WINE project.