Openfire: Excellent, free open source chat server
The ever-expanding world of chat clients and servers makes selecting a solution an exercise worthy of a trade study. In our search for the right instant messaging solution, we tried many that were too big and many that were too small. But we found one that was just right: an easily configured XMPP (aka Jabber) server that is compatible with the majority of today's key clients (Jabber, Momentum, Pidgin, and so on). It's also nice that this server -- Ignite Realtime's Openfire -- is open source and saved us money.
Openfire passed our test because of its usability and fairly wide range of configurable options. (We tested version 3.6.4 on Linux.) It comes with its own embedded database but can also connect directly to a MySQL, Oracle, Microsoft SQL Server, PostgreSQL, or IBM DB2 database, as handled by a clean database connection setup wizard that can't be beat. The server configuration GUI is straightforward and does not require a high level of technical understanding, which makes for an ideal small-business solution. Short of forgetting to open the necessary ports in the firewall -- probably the most likely point of failure for an administrator -- it would be difficult to botch the installation.