This is a huge question, and while there is a very good answer, a great answer will hopefully be available soon.
The concept of protecting your computer really comes down to protecting your hard drives. No other part of your computer can be attacked.
The good answer is to use a LiveCd. This is a complete operating system that runs completely off your CDROM drive and does not require your hard drives. An option to this is to use a flash drive in conjunction with the liveCD so that your preferences and bookmarks will be available.
The BEST answer would be to use a modified LiveCD that eliminates the possibility of mounting your hard drives or installing software to them. This is very possible to create, however nobody has done it yet.