First and completely unrelated to the original question, you need to do something about that Windows XP situation. Given it's gone end of life and is no longer receiving security updates, you're more likely to encounter some form of malware that might assault their virginal eyes than otherwise. Either update the machine to Windows 7/8 or install something like Ubuntu Linux on it (stick with the LTS releases - current LTS is 14.04). You shouldn't need to do anything more than add some RAM to the machine to get either operating system to run well - aim for around 2GB at least, and that's assuming you haven't done that already. You also should not permit them administrator level access to the machine. This means using strong, secure passwords that they cannot guess for the accounts that do have admin-level access.
Second, your kids are already approaching the age that you should be taking the filters off, not putting them on. The prevention era has already near completely passed (should have been between 7-12, not 12-16). When they hit the teenage level, you should be extending a bit more trust instead of taking it away. The problem is, if they're determined enough to hunt it down and access it, they will. The better course at this point is to do accountability, not filtering. Don't permit any unsupervised computer time for the younger girl, and place some of that supervising authority with your older boy (but keep an eye on him as well - though a slightly longer leash). These are the years that children become adults, foster that growth by extending heavier responsibilities, but keep an appropriate punishment system in place for when they fall out of line. Do allow a little less supervision for the boy, but still don't permit access after lights out. Do network logging (and most everything else) as Sol suggested, and let them know you'll be doing so as well. These are the formative years where adult habits are created and anchored, treat them as such.
Third, talk to them like adults, but explain to them the risks and dangers of others who desire to exploit them. Talk to them about the risks of oversharing, the value of privacy, the lack of privacy that exists online, how social media is not real socialization, and how any "privacy" settings are anything but private. It truly is a case of, "If you do not want people to know what you get up to online, you simply should not do it." When it comes to technology-based communication and activity, mankind has reached a similar level of omnipresent awareness to G-d - only it's flawed and imperfect which makes it dangerous, and we're too stupid and unforgiving to handle that level of knowledge about others responsibly anyway, so people get burned for it all the time. Utilize the log harvesting that you yourself will use to monitor their activities as an object lesson to this point. "If Mom and Dad can do it, pretty much
anybody can if they're determined enough." Just try to stay away from hyperbole and fearmongering. Lay it out rationally and calmly. G-d knows everything you do, and most everyone else knows more than they probably should as well. Act accordingly.
The birds and the bees discussion these days needs to unfortunately be a bit more graphic and extend well beyond just sex, too... and it needs to be more of an ongoing dialog than a single sit-down these days. Pornography and the habits that go along with it probably need to be discussed as well. Explain how pornography can change and damage attitudes towards the opposite sex, the issues of objectification (nice little springboard into idolatry could be made off that) and the unrealistic expectations that it creates. Discuss the abusive nature of the industry and how it chews up and spits out the people that participate in it. The diseases, the degradation, the money, the fact that it's fake and nothing more than acting. The backgrounds of some of these people and how they got to where they're doing what they're doing. How tangled up drug use and alcoholism is within the industry due to the need to self-medicate to do a lot of the more degrading work... it's not all Playboy soft-focus stuff, after all. A great resource for learning to help manage a lot of this sort of thing is
XXX Church.
Finally, if you want to help drive home accountability, look into
X3Watch. Don't be one of your children's accountability partners. Ask them who in the family (that you trust as well) they might want as an accountability partner instead. I have done so for a couple nephews at this point, and it worked reasonably well. Pornography can be addictive, and given some of the chemicals that are released in the brain during this sort of stimulation,
it's understandable. If a problem begins to surface (or already has), recognize that it's a problem and treat the issue with the gravity and respect it deserves. Punishment isn't going to be the answer: recovery is.
Edit: Crap, I just realized this was a necropost. I'm still leaving it for the benefit of others. *shakes fist at Rolo*