Who would be allowed to operate with no navigation lights over a populated area?
Military aircraft actually aren't bound by FAA rules. They have their own set of rules to follow. Having said that, though, their rules are basically "Follow the FAA rules, with a few exceptions." And, yes, one of those exceptions is for lights. Military aircraft can turn off their lights after dark, but only if they're actually flying a mission in an active war zone, or if they're doing training in a restricted area that's been cleared of other aircraft.

According to FAR §91.209(b), "The anticollision lights need not be lighted when the pilot-in-command determines that, because of operating conditions, it would be in the interest of safety to turn the lights off." The "operating conditions" mentioned generally refer to a situation where the glare from the bright, flashing anticollison light reflecting off a cloud would blind the pilot. Note also that this only applies to the anticollision light, the position lights (the steady red, green, and white lights on the wings and tail) must be turned on from sundown to sunrise.

Since you didn't mention the sound of gunfire or bombs dropping, I think it's safe to rule out the "military plane in active war zone" explanation. And since there was a civilian 737 in the area, we can also rule out the "military plane on training exercise" explanation. Thus, I think its safe to assume that this was just some guy (probably practicing his night takeoffs and landings) who forgot to turn his lights on.