A customer (thanks Mike!) recently submitted the following information about installing jPFChat in Joomla 1.5.7 with SEF turned on....   perhaps it may save some headaches...!

This article is known to be relevent under the following conditions....

-jPFChat V2.0 Beta 2
-Joomla V1.5.7, running in Legacy V1.0 mode
-SEF URLs turned on

The problem is trying to workaround the Mootools conflict by opening the jPFChat as "a new window without browser navigation".  If you try to add the new menu item, this won't work.  When the user clicks the newly added menu item, it results in the dreaded "404 - Component not found" page.
 
The workaround is to tweak the "Link" parameter (which isn't editable if you add the menu item as an Internal/jPFChat link).  Instead, add the menu item as an External link and change the Link parameter to read
 
index2.php?option=com_jpfchat
 
This is only necessary if you have set Search Engine Friendly URLs to "Yes" in the SEO Settings of the Global Configuration parameters in your Joomla adminstrator back-end.