>1) I need security, and I have successfully implemented Arnon's encryption routine for passwords. But I do need to turn if off for a new installation.

Store a local memory file on each machine. If file exists and variable in file set to .f. then don't start logon (passwords) and run setup routines for new installation else logon. At the end of the set up, delete the file, then all future starts will be forced through the logon.