Check the link click here .I think this is the card you are talking about.
It is acually a just wireless network card and is not itself a modem.
As for setting up wireless encryption it depends on
1 What operating system is in use.
2 If it is XP are you using the builtin wireless management or the propritory D-link stuff
3 which wireless access point/router is in use
The good news is a reinstall should not be required.
Re security. As the wireless network is completely seperate from the internet connection it doesn't matter whether your friend is online or not. If you are using an unencrypted wireless network, and you have file sharing enabled, your PC is vulnerable.
Seperatly - if you have an enencrypted wireless network attached to an always on internet connection YES other people can use your account.