My grandkids are visiting for the week. Is there any way I can run the game Purble Place, let the seven year old play it, but disable everything else on my computer? She's a good mouse clicker and she would be all over the internet as soon as she got bored with Purble.

Or - are there any great games for 7-year old's that would run on XP? We have an old computer that she could mess up to her heart's content. It's going to be wiped clean and turned into a network storage device next week.

This maybe a bit late but Windows Vista has builtin Parental Controls for locking down a user account.
Just goto Control Panel\User Accounts and Family Safety\Parental Controls.
You can set limits on computer time, games that can be played, sites that can be visited and programs that are allowed to run.
When you first go to it you setup a separate account for the kids to apply the limits to and then set a password on your account so they can't just use your user account to bypass the limits.