The Local Security Authority or LSA is a key component of the logon process in both Windows NT and Windows 2000. In Windows 2000, the LSA is responsible for validating users for both local and remote logons. The LSA also maintains the local security policy.
During the local (interactive) logon to a machine, a person enters their name and password to the logon dialog. This information is passed to the LSA, which then calls the appropriate authentication package. The password is sent in a nonreversible secret key format using a one-way hash function. The LSA then queries the SAM database for the user's account information. If the key provided matches the one in the SAM, the SAM returns the users SID and the SIDs of any groups the user belongs to. The LSA then uses these SIDs to generate the security access token.