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Since you are using Windows 7 Home Premium, some Group Policy settings will not work...
...but you are in luck, these settings will work
make the user an admin user
use user-level-IE-block.reg to block internet connectivity
make the user a standard user
There are two main settings in these reg files:
1) set proxy (only impacts the one user):
...one sets the proxy in a way that won't get to the internet
...one that enables that proxy settings
2) disable he ability to change the two settings above
(impacts all users, but other users' connectivity will not be impacted)
As the name implies, user-level-IE-unblock.reg will unblock internet connectivity.