It doesn't do any good to go from an MP3 to a FLAC. FLAC is only higher quality if it comes from a CD source. So yes, you need to download the FLAC files in the first place if thats what you want.
And for the most part, a good 320 mp3 will do nearly as good as a flac, unless your sporting some pretty good headphones, and have an ear for it then you may not notice the difference between a flac and a good 320 mp3 file.
And about the password, if you put Claws UI on your J3 then you can set a pin on start up, you can only use numbers but its a password.