FWIW I agree with what you're saying, Peter - policies are the *only* way to effectively lock down a Terminal Server environment. You can use a "Run only allowed applications" policy for positive locking down.
Or you could go one stage further and implement Citrix MetaFrame to publish individual applications to the users, thus eliminating the desktop completely.
Be aware that some applications contain back doors and security holes that allow users to get to the system without directly running explorer.
For example, my favorite "hack" is to simply type a url into a Microsoft application. When the address bar conveniently appears in the toolbar region (or if it doesn't, simply load up the web toolbar), type c:, m: or whatever the server's root drive letter is.
Hey presto - you've got explorer with system level access that bypasses user-level permission lock-downs - including policies.
Check out some of the security sites, if you're really security conscious.
Here's a good one:
- check out an article entitled "Hardening Windows 2000".
My favorite policy is corporate policy, however - knowledgeable users should know that they aren't supposed to hack the system;
Make all users aware through a legal notice that if they do anything untoward, then the company may take legal action against them.
If anyone ignores this, find out who hacked the system and inform their manager that his/her departments services are being compromised.
Or you could *lose* that user's most important data (or worse, e-mail or internet access) for a day or two. The BOFH attitude can be useful in some circumstances...
I hope this is helpful