SQL Server uses an undocumented function, pwdencrypt() to produce a hash of the user’s password, which is stored in the sysxlogins table of the master database. This is probably a fairly common known fact. What has not been published yet are the details of the pwdencrypt() function. This paper will discuss the function in detail and show some weaknesses in the way SQL Server stores the password hash. In fact, as we shall see, later on I should be saying, ‘password hashes’.
Download the paper in PDF format here.