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The guest account always had very limited permissions, unfortunately since activating FileVault on Lion it's deactivated by default. (More about it here: Unable to create Guest Account after enabling FileVault.)

Is it possible to give the guest account a password? Or can I create a regular account with the normal guest account's privileges (hence making a pseudo-guest account)?

I simply need FileVault and a limited account for my guest! :)

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You can now create Guest logins in Lion - – Sairam Oct 26 '11 at 10:06

Guest Account

This account is visible in Directory Utility, but please do not attempt to make it compatible with FileVault 2. Not only for security; there may be other good reasons for Apple making this account not available whilst FileVault 2 is enabled.

Other accounts

For your guest you might like to create a standard account, or add parental controls. You can probably have an account that is password-free. This is in line with Kyle Cronin's answer to a linked question.

Recommended reading

Apart from being able to encypt the entire drive, what are the other differences of Filevault 2 over Filevault?

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actually, no, you can NOT create password-free accounts of any type (admin, standard, or Parental Controlled) once FileVault is enabled. If you could, the guest account wouldn't be disabled. – lensovet Dec 29 '11 at 19:52

If you download the OS X server tools package, you can use the Users and Groups application to modify user's rights, even on OS X Client.

There are quite a few options to lock it down in various ways, depends on your exact requirements for locking it down.

So, I would just create a regular account and configure it to run the way you'd like.

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