First option is do you need Windows at all?
Ubuntu is very user friendly. Downside, it's not Windows so he may think Win is a piece of crap when he has to use it :-)
Then I've done a lot of magic recoveries on old PCs using Spybot and Ad-aware.
They can install some protection scripts that help prevent some damage.
Removing IE and forcing to use Firefox is a very good idea. I would install adblock as well with an automatic subscription for filters.
I would also remove any chat programs (MSN, AIM, etc). He's probably too young to use them but just in case. Some of these can run in a browser.
Maybe captain obvious but turn on automatic upgrades in WIndows...
Not running as admin helps but some programs will attempt to get root privileges.
Spybot has a tool called TeaTimer that detects if changes are attempted to be done to the registry.
For games you could run emulators (consoles and DOS games). Bit old but he'll have a big library that is portable to any system.
Last but not least maybe let your kid install the PC... if he learns how to do it then he can wreck it all he wants and fix it :-)
[download a life]