OK ... I am learning this along with you ...

It appears like you need to create a Group and put your Family account into it. Then you can edit particular Groups rather than Users.

Using Local Users and Groups

You might need to be logged on as an administrator or a member of the Administrators group in order to perform some tasks.

Local Users and Groups manages users and groups of users for your computer. You can create new users and groups, add users to groups, remove users from groups, disable user and group accounts, and reset passwords.

To open Local Users and Groups
Open Computer Management (Local).
In the console tree, click Local Users and Groups.
Notes

To open Computer Management, click Start, and then click Control Panel. Click Performance and Maintenance, click Administrative Tools, and then double-click Computer Management.
For information about using Local Users and Groups, in Computer Management, click Help on the Action menu.

alright, I created a new group and put the Family account in it but it's also in the Users Group.
and I've tried to set user configuration but it won't allow me to create new policies or anything.

Ok ... sorry that I might have wasted your time here

I now see this post:

Group policies apply to all users on a computer that is not in a domain environment. See www.dougknox.com, Win XP Utilities, Windows XP Security Console for an application that will allow you to enforce a good set of restrictions on a per-user basis.

I imagine that the program you already have is the best bet.

Sorry again for my confusion