I was wondering if I understand this correctly. I want to run a FreeRadius Server for Enterprise WPA2 for my wireless. I want the FreeRadius to use PAM and user accounts on the linux box that is running the FreeRadius Server.

Okay in the FreeRadius User config file I need to put something like

DEFAULT Auth-Type := Pam, Pam-Auth == "radius-wireless",

Then under the /etc/pam.d/ directory a file named "radius-wirless" which contains the following

auth required pam_listfile.so onerr=fail item=group sense=allow file=/etc/wireless.allowed
auth required pam_unix.so shadow
auth required pam_nologin.so
account required pam_unix.so
session required pam_unix.so

Do I understand this correctly or am I missing something here?

Yep it worked like that, but a not for ya'll Chrooting, Non Root User and Group, and PAM all put together = Headache.