These are all good questions, but you really should be taking them up with your employer. Arrange to talk with your boss and someone from the IT department about your concerns. If they can't answer them to your satisfaction, reconsider the telecommuting idea.
One other thing I would do, is attempt to get, in writing, some sort of statement that any of the software required to be installed on your computer will be used ONLY for the purposes stated. That there's no hidden aspect to monitor employees activities off the clock or anything like that. It is there solely for the purpose of making sure that you're doing the work you are being paid to do. If anyone is reluctant to sign such a document, you again may want to reconsider the telecommuting idea, or at least get a second work only computer.
Probably the best thing to do overall, to insulate yourself from any potential invasions by your employer, is to get a second system that is used ONLY for work related things, set up in its own room if possible that is then ONLY used for work related things. There are a number of other benefits to this as well. If your system should crash for some reason, it won't affect your ability to get your work done. It also keeps any other users of the system -- significant other, kids, friends -- from mucking up anything. You might even be able to get your employer to chip in for part of the cost of this system, or all of it. Though the more of it they pay for, the more they'll likely consider it theirs and want it back should you quit.
Probably the biggest problem for telecommuters, is that they are at home. There's the TV, games on your computer, and a myriad of other distractions. It can be very hard to keep your mind focused on doing your work. Having a computer, and ideally a whole room, dedicated to nothing but work, helps avoid this. Every time you sit down at that system, or walk into that room, your mind switches to "work mode", just like when you walk into the office. The key to maintaining this however, is that this computer, and/or room has to be STRICTLY for work related tasks and NOTHING else. Even something as simple as storing a few boxes in the room (that aren't related to work) can completely shatter the mentality of it being like an office. It's a very hard thing to build, and incredibly easy to destroy.
If you don't think you can do that, I wouldn't recommend the telecommuting idea unless you have unusually high mental discipline and can resist nearly any kind of temptation. Like say a significant other is feeling frisky and comes out wearing very little of anything, wanting to play. If you could honestly say you'd be able to keep your mind on your work in the face of that, then maybe you could handle telecommuting.
Just remember there's nothing wrong with deciding that maybe telecommuting isn't for you. Telecommuting can actually hurt your chances for promotion in some companies. Even if your work is exemplary, the fact that your boss doesn't see you on a regular basis can hurt you at review time. Finding out whether or not you'd be able to pop into the office any time you fancied, to work, would be a good thing to clarify. Be sure to consider all the angles before committing to anything.
Very little of this directly answers any of your questions, but I think it's important to look at factors surrounding questions, to help put them in proper context. It helps bring up important points that you may not have considered. I hope that's the case here, and if not, sorry for wasting your time, but with any luck someone in a similar situation may benefit.
I will be starting to telecommute from home and need advise. Do I use a limited user account? How do I set up the limited user account to work with the programs and still be able to function properly. Also if employer is useing monitoring software. How do I safeguard my administrater account and my computer from spying eyes? Do I start in administrater mode until employers software is downloaded then turn to limited? If I do that will the monitoring software be instaled on all aspects of my computer? Need help asap! To be prepared before the downloading starts! All advise is appriciated. I have already assigned a limited user account to work and it looks like all of the major programs are there. How do I make sure that any programs that I download from employer stays and only works in the "work" account? expecially time monitoring software? Thank You all in advance.