PHP Mychat is the fantastic tool for chating.

Steps to install it are as followos:

you can donaload this software from source: http://sourceforge.net/projects/phpmychat

Download phpMyChat-0.14.5.zip

1. wget http://www.tech-geeks.org/contrib/bbutts/phpChat/phpMyChat-0.14.5.zip

2 unzip phpMyChat-0.14.5.zip -d /home/username/public_html/

3. Setting up the database.
mysql_setpermission

Name of database :
Username :
Yes to password :yes
Enter Password :
Confirm Password :
Host :localhost
Yes to create :yes
Create Another :no
Exit :0
4 In browser, go to http://yourdomain.com/chat/setup.php3

5.select GO for auto setup.

6 - Fill the database

host=localhost, database name=yourdatabasename,
username= , password=
select GO to continue

7 - Fine Tuning Options.
Select the options you want and when finished
Click OK

8 - Go to admin Register Panel
Here you need to Enter a login and password to use for chat database admin.

9 - When prompted, copy and paste the generated text file into a
text editor.

10 - Edit the file with your database login and password.
(note the instructions to keep the at the end.)

11 - Save the file using the name config.lib.php3

12 - Move the file into the
/home/username/Public_html/chat/config/

13 - Now chatroom is ready at http://yourdomain.com/chat.
http://yourdomain.com/phpMyChat.php3

enjoy….with chat