I installed the config tool for the first time. On start up, it ask of r login and password or option of choosing to work offline. 

Is the login and password necessary to program the Beo5? Or can I simply choose work 'offline'?

The user name and password is only needed to recieve updates and to be able to store and restore configurations from the online server.

So just choose to work offline, you will still be able to work with the tool and download configurations to your Beo5/6