prevent users from saving to h/d

hi Folks, i have a school environment where they need quite a bit of lock down. the client machines are xp pro, the server is 2003 with AD. the client spec is to not allow the users to save to the hard drive only to floppy's or burn to CD. does any one know how to lock down or drastically reduce the amount of hard disk space on the client machines that the users can save to. i'm possibly thinking disk quota's , but that i think will only relates to the server hard drive. any thoughts. cheers BB