On Mon, 29 Oct 2001, Michael Beddow wrote:
AFAIK and FWIW, the "encrypted" passwords that Windows uses are effectively plain-text anyway. If you have an encrypted password then, with a little hacking of the SMB client, you can use the encrypted password without ever needing to know the plain-text password. Disclaimer: my knowledge on this may be out of date or inaccurate. Well, there is a security snag over SMB encrypted passwords, but I wouldn't agree it makes then "effectively plain text". If a rogue user gets read access to the smbpasswd file on the server (and of course something has already gone seriously wrong with the sysadmin's security practices if this happens), s/he can indeed use a hacked SMBclient to fool the server into thinking that that client knows the cleartext password of any users in that file. But without access to the smbpasswd file, this cannot be done. Contrast that with the much lower threshold required to gain illicit access on a clear-text system. There our rogue user simply uses a readily-available program to put the NIC on a Win9x client into promiscuous mode and sniff password exchanges. Using this same technique where passwords are SMB encrypted would not work: what goes on the wire and can be sniffed is not the "password-equivalent" string from the smbpasswd file, but the result of using that string as a key to encrypt another, random string. So provided access to the smbpasswd file is prevented, the method is significantly more secure than plain text (which isn't really secure at all).
From what you're saying, it seems as though SMB effectively uses challenge-reponse authentication with a shared secret, where the shared secret is the "encrypted" Windows password. Has the advantage of not sending passwords over the wire in the clear, but has the disadvantage that the password database is, to all practical intents and purposes, a listing of the plain-text passwords. If you manage to snag a copy of the password database (and yes, I have seen this done) then you have everyone's passwords instantly available (unlike if you get hold of /etc/passwd or /etc/shadow). Swings and roundabouts.
As I said, I prefer to use something a little stronger! And I try to mandate use of strong passwords - having seen L0phtcrack retrieve a few hundred in under three seconds I am under no illusions about the ease of cracking most user passwords (Windows or Linux). Michael