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Best practices to encrypt passwords in SQL Server 2000

What's the best way or algorithm to encrypt and decrypt the password column values in MS SQL Server 2000? We need to encrypt with a custom security application and decrypt before replicating this data to many other heterogeneous systems. We will also need to call these systems' encryption mechanisms before inserting and updating password data during the replication on the target systems. One of the targets includes Active Directory. We are assuming that it can be encrypted in AD and then replicated to other LDAP servers like Sun SourceOne.
Whoa, application design in SQL Server for compatibility with Sun SourceOne is a little out of the focus here. However, some good places to start are Microsoft Crypto API and Data Protection API (DPAPI) documentation and SQLSecurity.com. Here are some MS articles to get you started:

This was first published in June 2003

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