Here is a simple way to leverage the power of rules, views bulk operations, private message, private message growl and shoutbox to create a simple chat solution for your site. Site runs on shared server with limited resources and php 5.2 Please note that after one month of using this solution I found envolve chat module which is what I am using on my site now as it reduces the burden on the system. My Requirements:
One single public chat on the site which auto updates
Notifications to active logged in users on the site only
Per user ability to opt out from the notifications messages