Got a comment from Brandon about login script at sidebar in my earlier post here.
Brandon, I have turned the scripts originally by ioerror into a plugin which makes it a lot easier to implement. Check out details here in this post and the latest version is described here. Download page is here where you could grab the latest version 0.2 of this ezLogin [tag]plugin[/tag].
If you want to format it nicely you could wrap the call to the plugin by a class or id selector in your CSS. You could also adjust the width of the input box to suit the width of your sidebar.