I am going to answer your question accurately.
I'll also explain two things:
A. - LAMPP/XAMPP for Linux is not a LAMP Stack, rather it is a bash script driven suite built with minimal security for local development work. The OS is unaware it exists. Thus, it is difficult to reconfigure successfully.
B. it was never intended for mulit-tenancy, nor is it a provisioning system. Thus many things (read 'configurations') will have to be changed 'by hand', by 'you'. We don't support LAMPP in production environments, as it wasn't created for that. If you need a production, multi-tenancy setup of Apache, build a proper stack and use Webmin, Usermin & VirtualMin. (they are free and run on all flavors of Linux)http://www.webmin.com/http://www.virtualmin.com/
Now your correct answer -
What should be the password and default directory where files will get transferred ? How do we add users to FileZilla in Xampp Linux ?
As LAMPP was specifically set up to work as a single user, un-installed suite - the only user set up is a reserved Linux user 'nobody'. You will need to modify the file /opt/lampp/etc/proftpd.conf to accommodate your requirements for other users.
The default directory for that single user is /opt/lampp/htdocs.
To do what you envisage with lampp, will require changes to Apache to utilize mod_userdir (presumably your users would want 'their own folders'http://httpd.apache.org/docs/2.0/mod/mod_userdir.html
And changes to the configuration of ProFTPd to match those requirements.http://www.proftpd.org/docs/howto/index.html
This is a fairly sophisticated set of requirements to make everything work, and this is the reason I suggest LAMPP is not the best tool for this.