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How does the MS-Windows password encryption work?

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How does the MS-Windows password encryption work?

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This FAQ answer was written by Wayne Hoxsie : The password option in MS Win 3.1 is easily defeated, but there are those of us who really want to know how MS does this. There are many reasons why knowing the actual password can be useful. Suppose a sysamin used the same password in the windows screen saver as his root account on a unix box. Anyway, I will attempt to relay what I have learned about this algorithm. I will describe the process starting after you’ve entered the password and hit the [OK] button. I will make the assumtion that everyone (at least those interested) know what the XOR operation is. First, the length of the password is saved. We’ll call this ‘len’. We will be moving characters from the entered string into another string as they are encrypted. We’ll call the originally entered password ‘plaintext’ and the encrypted string(strings–there are two passes) ‘hash1’ and ‘hash2.

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