2 Qs [own directory/private feature]

What files do I need to edit to go about having WP in it own directory and call it from domain.com/index.php ? I tried it, but of course I think I did it wrong. Any help will be greatly appreciated.
Also, can someone explain how the private & password features work? When I test posted a “private” entry it didn’t show up on index.php but only in b2edit.php. Thank you again.