I have groups of beginning players that I would like to have play vs a chess engine - however all chess engines I can find for Arena Chess 3.0 are much too diffcult for beginners.  My students are groups of 3rd Grade students.

Can anyone recommend a chess engine for very raw beginners - something that will have a setting so that the students can have some success against as they increase in skill.

try lucas chess.it has engines rated between 1000-3000+ and user friendly.I think fritz also has a friendly mode called as sparring*.