Adrian - you'll need to be firm with your customer.

DNN has a very rich membership/security set of functionality.  To try and work around this is going to be technically difficult as well as confusing for the end-user.  DNN users the asp.net authentication model, and you're going to find it virtually impossible to get ASP.NET to work with two different authentication models within the one application.

If you really must have security-within-security then you may as well build your app as a stand-alone asp.net application then host in an iFrame.  It will have a lot of shortcomings but they'll get what they want.

With DNN modules, it's always better to either fully integrate or keep it separate.  Halfway solutions rarely work out.