Are you running Vista? If so, have you tried setting up the parental control features? There is a Windows Vista Web Filter in there that you can setup. Assuming you aren't letting them run as admins (you do have them as standard users, right?) You can either set a medium restriction level for them, or you can do your own custom filter if you want to pick certain areas they can't get to. I haven't used it much myself, so I can't vouch for how good of a job it does, but it certainly fits your low cost requirement, since it is free/included.
