Assuming that both machines are connected to the same Local Area Network:
On the second machine, select Open Remote...
If all has been configured correctly, you should see the first machine listed in the dialog, click it.
Now you should see the test db file listed.
Select it and click "open"
Filemaker will then open the db on your second machine as a guest of the first machine. If the file is set up in Accounts and Privileges to require a password, the user on machine 2 will now see a dialog asking them to enter a password in order to open the database file.
Ok, that is exactly the way I have it setup, except for I cant find the require password part. I have looked all over Accounts and Privileges.
Simply use Manage | Accounts and Privileges... to create a password for the file. There are many options here and I suggest using the help system to learn more.
Look up "About accounts, privilege sets, and extended privileges" for a good start on how to do this.