Forms Authentication

After creating extending application you will need to add the user in extended application from base application accessible via windows application.
http://www.simple-talk.com/dotnet/windows-forms/configuring-forms-authentication-in-sharepoint-2007/

MOSS is XHTML compliant.

Be cautious before recomending....Office SharePoint Server, by default, is not XHTML compliant
http://msdn2.microsoft.com/en-us/library/bb727371.aspx