Is it possible to create an ID/PW for each FileMaker user? We currently utilize the password logic in FMP, but were hit on an internal audit for poor security since we did not have an ID/PW process. Is this possible with FileMaker Pro 5.5?

It's possible to create a custom login system in FM5/6 that has individual user names and passwords. Unfortunately, most of these can be hacked into fairly easily (search back a year or two for discussions on Custom Login Systems for more.)

If your goal is security and not merely the appearance of security, then FM7 would be much better. FM7 allows much finer control of security and scripted account management. It also allows externally authenticated accounts. FM7's login is also encrypted, and the data itself can be encrypted. External authentication and data encryption do require Server 7, however. For more info, there are some tech briefs about Security in FM7 on filemaker.com.