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baraka: First, am I correct in understanding that you're essentially working freelance for your current boss? If you don't officially have an employment contract, haven't signed non-compete or NDAs with them, I would think that would weigh in the favor of you not being legally bound to refuse the freelance or face repercussions, although I might contact someone who works with HR (not at your present company) or your version of the Attorney General's office to make sure.
In terms of ethics and/or keeping CYA considerations, I would approach my boss and tell him you've been thinking about some freelance work in a general sort of way to get his opinion. You could really use some extra money, you have some friends who are looking for some website work, etc. If he doesn't flip out, I would proceed to tell your potential outside customer that you would be happy to consider the opportunity, but that you'd like to let your present employer know about it. You've already been cleared for outside freelance, so it shouldn't be a big deal as the work is unrelated to the jobs you've done through your current employer. This is assuming that you can do without the side money more easily than being without your current job or being in your boss' good favor. I would then tell my boss that customer X has asked for some help with website development that is unrelated to anything you've worked on in the past through your current position, and that you'd like to take the job for a quick moonlight.
I would also consider whether the side job might lead to other side jobs, and whether there is a market there to make it worth your hassle to go through all this. If you don't feel comfortable disclosing it to your boss, and you don't want to end up in a bad situation with your current boss, then I'd probably not do it. Chances are that no one would ever find out and all would be fine, but you have to prepared for the repercussions if it hits the fan. It's kind of like how TFP consistently says you know you're cheating if you're involved in sexual or relationship behavior that you don't feel comfortable disclosing to your SO. Well, in this professional sense I think your current job is like your SO, and you're not sure if you're being asked to cheat. If your potential customer doesn't feel comfortable having you disclose this to your boss, then I would personally help your potential customer find someone else to help him (someone you know) and tell him that you'd appreciate any business from clients not currently with your present employer, or for jobs that were clearly unrelated to the primary business of your current employer. This way if this side opportunity leads to additional work from the new customer or his contacts, you can probably get a piece of them by working with the friend that you originally referred this job out to.
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