Note - This facility is for expert administrators only, cgi scripts will not work AT ALL if you don't do this right.
The chroot facility in cgiwrap is built on a loopback filesystem approach. What this means is - cgiwrap expects an equivalent filesystem structure inside the chrooted area as is outside. The prefix specified with --with-chroot=PATH should point to the top of your chrooted area.
Within the chrooted area, you should place any executables/libraries/tools that you want available to cgi scripts. For the user data within the filesystem I suggest you use a loopback NFS mount. Is suggest using the nosuid and nodev options on the mount for additional protection.
For optimum protection, you might also consider using a loopback NFS mount for the top level of the chroot area as well, mounted with the 'ro' mount option. This will prevent ANY changes to that filesystem.
Note, this is not as secure as some chroot facilities, but it is more secure than the basic cgiwrap setup. For additional security, it is recommended that user home directories have NO world/other permissions set.