I was told that there is this script that exists where you can have people sign up for a phpbb and the board will automatically be created for them on your server. Does anyone know where I can find it?

I am sure it exists. Try google.com & hotscripts.com
Or even phpbb's forums on phpbb's website.
I am sure they will know for sure.

It probably takes a lot of custom configuration unless its build for a cpanel setup etc.

You're probably thinking about fantastico, which is an auto installer that runs with cpanel. It's not just phpbb it installs either, but lot of things like blogs, shopping carts, etc.

More information can be found at their website (http://www.cpanelthemes.com/fantastico.php)

http://sebflipper.com was developing such script.. Not sure if its completed yet or not.