Two Blog Installations, One User Table. Same Domain!

I am quite new to PhP and wordpress itself.
I have a need to set up multiple wordpress installations, but use the same user base.
The design will be as follows:

http://www.sitename.com
http://www.subdomian.sitename.com

Users should be able to toggle between these two blogs comfortably, which I understand should be through cookie sharing.

I see a lot of discussion in this kinda setup. However, I would appreciate a detailed step by step set up procedure.

As far as my understanding:
1. use same database but different table prefixes.
2. use main blog user tables for the subdomain blog user base also.

1 & 2 are done by editing wp-config.php.

help me understand the cookie sharing and user role inheritance. Also if you see any other config changes to be done?

Thank you
Nirmal