Kristie,
I just installed it with my IPB 2.0 at swa.flightattendants.org. Integration with the database was a breeze! It only took about 15 mintues total to upload, integrate and login to chat.
I'd like to use it with my UBB.threads bb as well, if someone could write integration instructions for UBB.threads. If that can be done it is automatically password protected since you must be logged into .threads in order to access FlashChat. It authenticates users via the .threads user database.
If you go to
http://www.tufat.com you will be able to research more about FlashChat if you wish, and there are support forums there as well which would answer your specific question about a stand-alone database with password protected logins.
Regards,
Jason