...what do you do about the legal aspect of allowing the version downloaded from the Internet to be used only within the intended scope

One does not allow a version to be downloaded from the Internet to be used only within the intended scope. Produce a product that can only be used within the intended scope because users will not oblige themselves to your software license if they can re-purpose your software for other means.

In general, a software license is just words and numbers, glossed over and skipped during installation or never read altogether. Though legally binding under the DMCA, it is better to ensure any functionality you desire to and desire not be designed upfront.

The only good a software license represents is to prevent your intellectual property from becoming mine. However, I can always run your software and produce a competing product off your ideas from what I see (not from code through de-compilation).

Thus, try to protect yourself as much as you can to the extent of your resources and the law.

Is there a standard procedure / contract for this - i.e. are there documents in the public domain for this or can I take one from another software vendor, tailor it, etc. Or, do I need to hand crank it - i.e. get an accountant/legal-person to write it up

Depends upon what you are trying to achieve. From your question within the bulleted section, you would need to tailor your software and your software licenses to support those but know it is not entirely possible to constrain user action in all circumstances. Microsoft can certainly attest to that but they have the means to legally prosecute infringements and that, I think, is where you should focus.

Certainly get legal counsel or advice from a trusted source and do whatever else you feel necessary.

I tend to use FreeNetLaw for most of my small projects (esp. if I release them into the public domain). They have a good collection of templates that can be used for different purposes. The templates are licensed under the Creative Commons Attribution 2.0 UK: England & Wales License which requires attribution to the source website. Please read their terms carefully before reusing their content.

But you should also consider litigation while drafting your disclaimers and EULAs. And that is often the more worrisome aspect of software distribution (even for free/public domain software).

Remember that any advice you receive here is not to be fully trusted. Most people here aren’t lawyers, and even if they are, they’re not YOUR lawyer. The laws of software licensing and distribution tend to be sticky and different between different countries and states, so even if someone here is in exactly your situation but is three states away, his personal experience might not be applicable to you.

The best advice is get a lawyer. Get a lawyer that specializes in technology licenses. This is the best legal advice I can give. I know many lawyers who specialize in consulting for small software firms. Even a one man company needs a lawyer to draft paperwork make sure you’re not making a mistake.

You wouldn’t expect your customers to write their own software. That’s what you’re there for. Likewise, you should get a professional for your legal work.