Hi Jen,
First of all, colourising isn't really one of my strengths, so I won't comment much on that, other than to say that the colours seem far too muted for me.
You asked about isolating your subjects from the background, minimising halos, and here I may be able to help a little.
What I did, was use the picture itself to generate a mask.
I first looked at the channels, to see which gave the best contrast between figures and background, I chose the red channel, and copied this to create an alpha channel, which I named mask.
Now I applied levels to this, to further emphasise the contrast. Then I used a combination of dodge and burn, and black and white brushes, to create the mask. This was the inverse of what I actually wanted, so I inverted it to get the mask I needed.
To apply the mask to your image, I first duplicated it. Then I went to the channels palette, and ctrl+clicked the mask channel to select it.
Now I just clicked on the duplicate layer, then in the layers palette I clicked on the mask symbol to apply the mask to the layer.
Now create a new channel, fill it with mid grey, and move it between your background and duplicate layer.
By switching the grey layer on and off, you can see how successful your mask is. Any inconsistances can be rectified by hand, by painting on your mask, using black and white brushes.
Sounds a bit involved, but really did'nt take too much time.
I've posted a copy of my layer stack, and channels stack below.
For a much better explanation of this technique, see
http://www.russellbrown.com/tips_tech.html
and scan down to Advanced masking.
Hope this helps.