Smartlaunch has to run as a Windows administrator so that it can make a series of changes to protected registry entries that block access to the control panel, C drive, and etc. Security is pretty tight by default, and with the proper physical security, network setup and a domain, it's nearly airtight.
As for Steam, yes there is. You can use a series of BAT files to accomplish this on a per-game basis inside Steam, for each user account. We (DGCS) also sell a loader that will accomplish this automatically.