>I've been trying to play around with MSDE for a while now and still don't understand how to assign permissions to the database.
>
>From what I've gathered on the subject, it does not support SQL authentication so any of the permissions assigned from with SQL itself do not have any effect whatsoever. Is this correct?

No, it isn't correct. MSDE support almost all the features of SQL Server, including mixed mode authentication.

>So I have to use the 'trusted connection' type connection where windows controls access to the SQL database. It seems that the only way I can currently get to use the database from a remote machine is if I log on with 'administrator' level permissions.
>
>Obviously, I can't give everyone administrator level permissions, so what do I need to do so that I can let people with less than administrator permissions access the database.
>

You can assign access rights to the Windows users as you can for Sql Server logins. The easiest way to do that is by using Enterprise Manager that comes with full version of SQL Server.