Shadow password files

[Geoff Sweet <larryboy2k_(_at_)_attbi_(_dot_)_com>]

I am working on implementing smtp-auth patch on my qmail server running
OpenBSD 3.1.  I am currently having difficulties with authentication. 
One of the recommended resolutions is to make sure that my checkpassword
program can read the shadow password file.  Now as I dig through google
to understand what this means, I am lead to beleive that the shadow file
is simply the /etc/passwd file that is generated from the master.passwd
file right?  The current permissions are 644.  So my 2 part question is
this:

1 Did I learn correctly that the passwd file is the "shadow password"
file.

2 Are the permissions correct enough that a program or user could "read"
the file?

Thank you
Geoff Sweet