Is there any way through which one can limit the rights to use Internet to Limited user accounts on a single PC?
^ I guess using Group Policy, you can restrict network access. You'll need to dig more in Microsoft's KB or Google it. Maybe some wiredian who is more expert on this topic can give you exact guidelines.
yes using group policy you can apply any settings, just go to run and type 'gpedit.msc'
If you have VISTA, it has parental controls that are very good and easy to set up from control panel.
Otherwise, you have to resort to group policy which is basically the same thing but not as user friendly as Vista parental controls.