I've the same problem. I've installed Joomla 1.5.18 and booklibrary 1.5.3 basic. If the admin-area is protected with htaccess, it happens, that whenever I select the medialibrary section in the frontend, a dialog pops up, asking for username and password. It seems, that the frontend-code from medialibrary refer to code existing in the admin directories.
Can u help me?
tnx & greetz