This is a very important topic. Since the IT field is my profession I am involved with security on a daily basis. I also have a 16 and 14 year old step kids that each have their own computer.
I do not run any software on the computers however I do stress to them the importance of what they are doing. Fortunately I know where to look and I typically know what the most popular things kids are doing.
Two pieces of software I know people have used are NetNanny and CyberPatrol. Where I work, I use a very expensive program (for the average user) called SpectorSoft which monitors EVERYTHING users do on their computer. Every click, which windows are active, and how many clicks, etc…
I do see that spectorsoft has parental software but I am not familiar with it. Let me tell you, spectorsoft (the version I use at my office) is a wonderful program.
If anyone ever has any questions, please use me as a resource, I will give as much knowledge as I have regarding this or anything with technology.