There are several free chat applets on the net. Here are few of the most known ones:
WebMaster's BackPackphpMyChatjIRCChat Applets @ HotScriptsChat Applets @ Java ArchivesChat Applets @ JavaSpotThat's more than enough, each applet listed here has its own features, bugs and issues. It would be too long (and boring) to list them here, so i'll let you check the out by yourself.
Have fun.