With 1.7.x or previous it is quite easy to edit the forms (as michael said). But in 1.8.x and onwrads it is hard to achieve (at least, I couldn't success). You could inserte new fields, but i don't know how to add text, or instuctions. The new fields have a long description but you can't present this long description: in the forms (login or edit profile) appear only the "field name".
There is a thread (uncompleted) about this...
http://moodle.org/mod/forum/discuss.php?d=66335#p362301