I mined namecoin directly for a week a long time ago and only found 1 block, since then I used the software to get a name coin address. And then entered that address in a merged mining pool. (no namecoin user or password neded)
The username and password in the "bitcoin.conf" are to be used in your mining software. If you use GUIminer, it is obvious where to enter it.
Can't remember how to do it all but from what i recall run namecoin, launch a separate DOS window to operate it, provided you are in the root of the namecoind.exe just type namecoind help for a list of commands.
Remember you may need to open the appropriate port on your firewall.