Jim,
I don't know of any easy way to disable the backspace, as it's a keyboard function, not one in Word. But...if I were in your shoes, right before the timed tests, I'd pull out my pocket knife, screwdriver, whatever, and pop the backspace keys off their keyboards. Highly unsophisticated, but hey... If they want to take the time to fish their little fingers all the way down to the button, then their score's really going to suffer.