Sorry, the .zip file had an old version of peq_backend.php in it. It's been fixed if you want to redownload it. Otherwise, just change line 7 of your peq_backend.php from config.ini to config.php, and that will fix the problem.
The default login/pass is there for convenience for those who only use the editor on their local computer (not over the internet). If you don't want it there, just edit config.php and change
Code:
$login_name = 'admin';
$login_pw = 'password';
to
$login_name = '';
$login_pw = '';
peq_backend.php will let you remove the default login to the editor and add a different one.
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