I like the keylogger idea.
I installed Vista Home Premium and it has built in monitoring software. I can lock them out at certain times of the day, and get to see what programs they ran, websites visited etc.
Out ISP also gave us K9 Web Protection (Home edition is Free) (http://www.k9webprotection.com/
) and that also logs and blocks sites just like Vista - so some of the features are redundant, but with Vista I have to enter the blocked web sites, and with K9, the program checks its database of sites and contact that should be blocked based on the settings you set.
My kids are 8, 7, 3 and 7 months so, I started while they were young. Also, their computer never leaves the open family room, and they won't have a laptop in their room until much older.