I have a simple application, based of the \"Utility Application\" template. It retrieves a password-protected XML file (via NSXMLParser).
I want to allow the user to
I agree with Ben. This is exactly what the Keychain is for.
I would not, under any circumstances simply store passwords in the defaults as dbr suggests. This is highly insecure. You're essentially storing your passwords in the open.
In addition to Apple's sample code, I also recommend Buzz Anderson's Keychain code: iPhone Keychain Code