You need a normal user login for everyday use. Administrative use of course will require an admin account.
Even with the improvements Vista has made in the area of user privileges, this advice still holds true.
The reason using a normal user account helps is that most system level changes are not available to the user or the web browser the user is using, or e-mail, or a number of other common attack methods. It doesn't solve every problem though. So anti-(virus, spyware, rootkit, <insert malware categories here>) software for protecting your computer is still a great idea. Along with safe computing practices.
You will need to use the admin account for installing software, resetting other account passwords, installing drivers, installing updates, windows update (if you choose not to allow automatic updates), defragmenting, etc. That is definite with Win XP, I'm still learning nuances of Vista so I may be incorrect on some of those administrative tasks.
You may still have issues with poorly written (from a security standpoint) software that requires admin rights. Try to practice using non-admin/normal user accounts as much as possible.
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