Sounds like you're after Deep Freeze. This is the main product used for this in the corporate world. It's not free (45.00 CAD for the standard version), but it is well worth every penny.
Faronics Deep Freeze helps eliminate
workstation damage and downtime by
making computer configurations
indestructible. Once Deep Freeze is
installed on a workstation, any
changes made to the
computer—regardless of whether they
are accidental or malicious—are never
permanent. Deep Freeze provides
immediate immunity from many of the
problems that plague computers
today—inevitable configuration drift,
accidental system misconfiguration,
malicious software activity, and
incidental system degradation.
Deep Freeze ensures computers are
absolutely bulletproof, even when
users have full access to system
software and settings. Users get to
enjoy a pristine and unrestricted
computing experience, while IT
personnel are freed from tedious
helpdesk requests, constant system
maintenance, and continuous
configuration drift.
Similar products include Smart Restart and Shadow User, both commercial as well.