How to restrict the guest account

Step 1:
Log into a local administrative account.
Choose Manage from the My Computer Context Menu.
From the Computer Management window browse to
System Tools > Users and Groups > Users
Double click on Guest to access the Guest Properties window
Click the Member Of tab
Click the Add button
From the Select Groups window click the Advanced... button
Click on the Find Now button
Select Administrators from the list
Keep clicking on all the OK buttons till it exits the Guest Properties window

This step just gave the guest account administrative privileges to run tools such as regedit, GPedit.msc, Services.msc, MMC, DOC, etc.

Close all the open windows and log off from the administrative account.

Step 2:
Log into the local Guest account.

Apply whatever restrictions you wanted to add to the guest user using regedit, MMC, or other tools.

Log off from the Guest Account.

Step 3:
Log back into the Administrative account.

Go back into Local Users and Groups>Users>Guest

Open the Guest Properties and click the Member Of tab. Select Administrators and click the Remove button.
Click OK.

Thats it. You now have a guest account with whatever restrictions you wanted to apply to it.