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How should passwords and usernames be stored in a C#/ASP.NET web app environment using SQL Server? [duplicate]

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I am working on a project that has to have authentication (username and password)
It also connects to a database, so I figured I would store the username and password there. However, it seems like not such a good idea to have passwords as just a text field in a table sitting on the database.
I'm using C# and connecting to a 2008 express server. Can anyone suggest (with as many examples as possible) what the best way to store this type of data would be?
P.S I am open to the idea that this info not be stored in the database if a good reason can be provided

You are correct that storing the password in a plain-text field is a horrible idea. However, as far as location goes, for most of the cases you're going to encounter (and I honestly can't think of any counter-examples) storing the representation of a password in the database is the proper thing to do. By representation I mean that you want to hash the password using a salt (which should be different for every user) and a secure 1-way algorithm and store that, throwing away the original password. Then, when you want to verify a password, you hash the value (using the same hashing algorithm and salt) and compare it to the hashed value in the database.
So, while it is a good thing you are thinking about this and it is a good question, this is actually a duplicate of these questions (at least):
How to best store user information and user login and password
Best practices for storing database passwords
Salting Your Password: Best Practices?
Is it ever ok to store password in plain text in a php variable or php constant?
To clarify a bit further on the salting bit, the danger with simply hashing a password and storing that is that if a trespasser gets a hold of your database, they can still use what are known as rainbow tables to be able to "decrypt" the password (at least those that show up in the rainbow table). To get around this, developers add a salt to passwords which, when properly done, makes rainbow attacks simply infeasible to do. Do note that a common misconception is to simply add the same unique and long string to all passwords; while this is not horrible, it is best to add unique salts to every password. Read this for more.

Background
You never ... really ... need to know the user's password. You just want to verify an incoming user knows the password for an account.
Hash It:
Store user passwords hashed (one-way encryption) via a strong hash function.
A search for "c# encrypt passwords" gives a load of examples.
See the online SHA1 hash creator for an idea of what a hash function produces (But don't use SHA1 as a hash function, use something stronger such as SHA256).
Now, a hashed passwords means that you (and database thieves) shouldn't be able to reverse that hash back into the original password.
How to use it:
But, you say, how do I use this mashed up password stored in the database?
When the user logs in, they'll hand you the username and the password (in its original text)
You just use the same hash code to hash that typed-in password to get the stored version.
So, compare the two hashed passwords (database hash for username and the typed-in & hashed password). You can tell if "what they typed in" matched "what the original user entered for their password" by comparing their hashes.
Extra credit:
Question: If I had your database, then couldn't I just take a cracker like John the Ripper and start making hashes until I find matches to your stored, hashed passwords?
(since users pick short, dictionary words anyway ... it should be easy)
Answer: Yes ... yes they can.
So, you should 'salt' your passwords.
See the Wikipedia article on salt
See "How to hash data with salt" C# example (archived)

As a key-hardened salted hash, using a secure algorithm such as sha-512.

The best security practice is not to store the password at all (not even encrypted), but to store the salted hash (with a unique salt per password) of the encrypted password.
That way it is (practically) impossible to retrieve a plaintext password.

I'd thoroughly recommend reading the articles Enough With The Rainbow Tables: What You Need To Know About Secure Password Schemes [dead link, copy at the Internet Archive] and How To Safely Store A Password.
Lots of coders, myself included, think they understand security and hashing. Sadly most of us just don't.

I may be slightly off-topic as you did mention the need for a username and password, and my understanding of the issue is admitedly not the best but is OpenID something worth considering?
If you use OpenID then you don't end up storing any credentials at all if I understand the technology correctly and users can use credentials that they already have, avoiding the need to create a new identity that is specific to your application.
It may not be suitable if the application in question is purely for internal use though
RPX provides a nice easy way to intergrate OpenID support into an application.

In your scenario, you can have a look at asp.net membership, it is good practice to store user's password as hashed string in the database. you can authenticate the user by comparing the hashed incoming password with the one stored in the database.
Everything has been built for this purposes, check out asp.net membership

I would MD5/SHA1 the password if you don't need to be able to reverse the hash. When users login, you can just encrypt the password given and compare it to the hash. Hash collisions are nearly impossible in this case, unless someone gains access to the database and sees a hash they already have a collision for.

manage a secure password

My program asks for a password and save it inside a text file and the next time i run my program if the text file exists it asks for the password and I compare it with the password inside the text file.
Now, in the real world i know a text file is not used but I don't know how I can improve my technique 'cause regardless of a encryption algorithm a text file is readable for everyone and other solution as a registry key the same.
This is an exercise and my intention is to learn if I'm were programming a commercial app then what technique I should use to store a password with a more robust security?

It doesn't matter where you store your passwords, as long as you store only a hash of them. A text file will do pretty well, important is that you use a salt and a slow hash function with a cost factor. Algorithms like MD5 or SHA* are not appropriate to hash passwords, because they are too fast and therefore can be brute-forced too easily.
The library BCrypt.NET implements the BCrypt algorithm, which is designed to hash passwords. It will automatically add a cryptographically safe salt and includes it in the resulting BCrypt hash.
// Hash a new password for storing in the database.
// The function automatically generates a cryptographically safe salt.
string hashToStoreInDb = BCrypt.HashPassword(password);
// Check if the hash of the entered login password, matches the stored hash.
// The salt and the cost factor will be extracted from existingHashFromDb.
bool isPasswordCorrect = BCrypt.Verify(password, existingHashFromDb);
Another good algorithm is PBKDF2, crackstation.net has a good code example.
If you are interested in more detailed information, you could have a look at my tutorial about safely storing passwords.

The idea is to encrypt or hash the password but never to decrypt it. I.e. you transform your password in a way which is not reversible.
When the password is entered the first time, you (one way) encrypt
the password and store it.
When a user tries to login, the entered password is encrypted again and compared with the stored one.
A code example was already provided in this answer:
byte[] data = System.Text.Encoding.ASCII.GetBytes(inputString);
data = new System.Security.Cryptography.SHA256Managed().ComputeHash(data);
String hash = System.Text.Encoding.ASCII.GetString(data);
Your program will store / compare the hash value instead of the plain password.
The code can and should be further approved. An attacker could create large dictionaries / rainbow tables of encrypted password and use them as a lookup for password cracking. This can be prevented by adding some "salt" to the password to be encrypted. Form more details see this answer.

Best methodology for encrypting a password

I read so many articles left and right about password encryption but it seems that they are mostly 2-4 years old.
I wonder if there have been new findings on what methodology has already been cracked and mainly what's the more secured way to encrypt a password for user logins on a public website today in 2013.
The main goal is to do a ONE WAY (not decryptable) secured encryption so using hash or not, using salt or not, that's what I'm hoping to learn here.
======================
Other question:
Does it make sense to change the SALT for each password instead of using the same one for all?

Here is an excelent site that talks about password hashing. I think it covers all of your questions: https://crackstation.net/hashing-security.htm

Does it make sense to change the SALT for each password instead of using the same one for all
A salt needs to be a different random string for each and every password.
Note the word random.
Usernames, the system clock and other low entropy data is not advisable.
using salt or not,
Hashing password without using a salt leaves you open to parallelization of the attack.
Not only does it allow rainbow tables, but it also allows the attacker to hash easy to guess passwords and compare the hash against all entries in the database.
This means that an unsalted database with 1,000,000 records in a million times easier to crack than one with 1 entry.
-Not good-
Read up on the subject at security.stackexchange
The leading expert on these subjects stalks the ranks at https://security.stackexchange.com
The canonical answer to your question is here: https://security.stackexchange.com/questions/211/how-to-securely-hash-passwords
Thomas Pornin is a well known cryptographer and writes very informative, insightful and entertaining answers; check out his user profile. https://security.stackexchange.com/users/655/thomas-pornin
And don't miss out on the Chimps.

Securely storing and searching by social security number

So I'm working on a supplemental web-based system required by an HR department to store and search records of former personnel. I fought the requirement, but in the end it was handed down that the system has to both enable searching by full SSN, and retrieval of full SSN. My protestations aside, taking some steps to protect this data will actually be a huge improvement over what they are doing with it right now (you don't want to know).
I have been doing a lot of research, and I think I have come up with a reasonable plan -- but like all things crypto/security related there's an awful lot of complexity, and it's very easy to make a mistake. My rough plan is as follows:
On first time run of the application, generate a large random salt, and a 128bit AES key using RijndaelManaged
Write out both of these into a plaintext file for emergency recovery. This file will be stored offline in a secure physcial location. The application will check for the presence of the file, and scream warnings if it is still sitting there.
Store the salt and key securely somewhere. This is the part I don't have a great answer for. I was planning on using DPAPI -- but I don't know how secure it really is at the end of the day. Would I be better off just leaving it in plaintext and restricting filesystem access to the directory its stored in ?
When writing a record to the database, hash the SSN along with the large salt value above to generate a field that is searchable (but not recoverable without obtaining the salt and brute forcing all possible SSNs), and AES encrypt the raw SSN value with a new IV (stored alongside) to generate a field that is retrievable (with the key/iv) but not searchable (because encrypting the same SSN twice should yield different output).
When searching, just hash the search value with the same salt and look it up in the DB
When retrieving, decrypt the value from the DB using the AES key/iv
Other than needing a way to store the keys in a relatively secure way (number 3 above) it seems solid enough.
Things that won't work for us:
"Don't do any of this" Is not an option. This needs to be done, and if we don't do it they'll a) get mad at us and b) just pass all the numbers around in a plaintext document over email.
This will be internal to our network only, so we have that layer of protection at least on top of whatever is implemented here. And access to the application itself will be controlled by active directory.
Thank you for reading, and for any advice.
Update #1:
I realized from the comments that it makes no sense to keep a private IV for the SSN retrieval field. I updated the plan to properly generate a new IV for each record and store it alongside the encrypted value.
Update #2:
I'm removing the hardware stuff from my list of stuff we can't do. I did a bit of research, and it seems like that stuff is more accessible than I thought. Does making use of one of those USB security token things add meaningful security for key storage?

I've had to solve a similar problem recently and have decided to use an HMAC for the hashing. This would provide more security than a simple hash, especially as you can't salt the value (otherwise it wouldn't be searchable).
Then as you say, use AES with a random salt for the reversible encryption.
It maybe that you don't need to encrypt this data but I had no choice and this seemed like a reasonable solution.
My question on IT Security https://security.stackexchange.com/questions/39017/least-insecure-way-to-encrypt-a-field-in-the-database-so-that-it-can-still-be-in

With respect to key storage there are two methods you can use if you choose to store your AES key in the web.config. First method is to use DPAPI as you mentioned. This will encrypt your web.config application setting for that box. The other method you can use is via RSA key (check out this MSDN tutorial), this will encrypt your web.config just like DPAPI however you can use the RSA key on multiple boxes, so if the application is clustered then RSA key is better (just more complicated to setup).
As far as generating the key before you run your application not on the machine running the app this way there's no chance you're going to leave the text file in the directory. You should generate the key as follows.
Generate a random value using RngCryptoServiceProvider
Generate a random salt value using RngCryptoServiceProvider
Hash the two values with PBKDF2 (Rfc2898DeriveBytes)
The reason you use the key derivation method is it protects you in case RngCryptoServiceProvider was found to be insecure for some reason which happens with random number generators.
Use AES 256 instead of AES 128, reason is these algorithms are extremely fast anyway so get the higher security it's almost free. Also make sure you're using the algorithm in CBC or CTR mode (CTR is available in the BouncyCastle library).
Now this will not give your key absolute protection if someone were able to put up a aspx file in your directory. Because that file will become part of your application it would have access to your decrypted values including your key. The reason I'm mentioning this is your network and server security will have to be top notch, so I would highly recommend you work hand-in-hand with your network security team to ensure that nobody has access to that box except the parties in the HR department that need access (Firewall not Active directory). Do NOT make this application publically accessible from the internet in any way shape or form.
You also cannot trust your HR department, someone could become a victim of a social engineering attack and end up giving away their login thus destroying your security model. So in addition to working with your network team you should integrate a two factor authentication mechanism to get into the system, highly recommend going with an actual RSA key or something similar rather than implementing TOTP. This way even if someone from the dept gives away their password because they thought they were winning a free ipad, the attacker would still need a physical device to get into the application.
Log Everything, any time someone sees a SSN make sure to log it somewhere that will be part of a permanent record that's archived on a regular basis. This will allow you to mitigate quickly. I would also put limits on how many records a person can see in a particular time frame, this way you know if someone is mining data from within your application.
Create a SQL user specifically to access this table, do not let any other user have access to the table. This will ensure that only with a particular user id and password can you view the table data.
Before deploying to a production environment you should hire a penetration testing team to test the application and see what they can get, this will go a long way to harden the application from potential attackers, and they can give you great advice on how to harden the security of the application.

Create a new salt and IV for each record. If you need to dump the data into a report for some reason (hopefully without my SSN in it), you would be able to use the method you describe with the unique salt and IV. If you only need to search on an SSN, you could actually hash it instead of using a reversible encryption (more secure).

I think I read somewhere once that hashing a limited set of inputs gets you absolutely nothing. A quick google turned up this SO post with similar warnings:
Hashing SSNs and other limited-domain information
I must admit that I am also no security expert, but given that the possible number of inputs is much smaller than 10^9 which any decent hacker should be able to breeze through in a matter of hours, hashing a SSN seems like you are adding a small layer of annoyance rather than an actual security/difficulty barrier.
Rather than doing it this way, could you do something else? For example, SSN's only have value to an attacker if they can associate a name to a number (since anyone can enumerate out all numbers easily enough). In that case, could you encrypt the user id that the SSN links to in such a way that would be impractical to attack? I am assuming your employees table has some sort of ID, but maybe instead of that do a hash on their email or some sort of guid? That way, even if they do get your SSN data, they would not be able to tell which employee's it is until they managed to brute force that link.
Then again, that approach is also flawed since your company may not have that many employees total. At that point it would be a relatively simple matter of guessing and checking against a company directory to attain everything. No matter how you slice it, this security flaw is going to exist if SSN's must be stored with other identifying data.

How to encrypt a password for saving it later in a database or text file?

I want my application to save the password encrypted in a database or in a text file.
How can I do that assuming that the database or text file can be open by anyone?
Duplicate
Encrypting/Hashing plain text passwords in database
Not duplicate
I'm asking for code specific for .NET
EDIT: I'm saving the password for later use. I need to decode it and use it to login.
It doesn't have to be super secure, it just needs to be unreadable to the human eye, and difficult to decode with a trivial script.

StackOverflow readers don't know how to write secure password schemes and neither do you. If you're going to do that, save time by sticking with plain text. From Enough With The Rainbow Tables: What You Need To Know About Secure Password Schemes:
Rainbow tables are easy to beat. For
each password, generate a random
number (a nonce). Hash the password
with the nonce, and store both the
hash and the nonce. The server has
enough information to verify passwords
(the nonce is stored in the clear).
But even with a small random value,
say, 16 bits, rainbow tables are
infeasible: there are now 65,536
“variants” of each hash, and instead
of 300 billion rainbow table entries,
you need quadrillions. The nonce in
this scheme is called a “salt”.
Cool, huh? Yeah, and Unix crypt —-
almost the lowest common denominator
in security systems —- has had this
feature since 1976. If this is news to
you, you shouldn’t be designing
password systems. Use someone else’s
good one.
Use BCrypt - Strong Password Hashing for .NET and Mono. It's a single cleanly written .cs file that will continue to meet your needs as password cracking computers get faster.

BCrypt - Strong Password Hashing for .NET and Mono

Triple DES is one way to do it, as long as you mean "A password that my system needs to be able to recall in order to access a resource". If you mean the password is something a user needs to be able to gain access to your system, probably don't want encryption, just a hash will do. When you store the hashed password value, it is useless to anyone with direct database access, but can still be used for authentication. All you do is compare the stored hash against a hash of the incoming password. If they match, then you grant access.
It isn't perfect, by any means, but it is the way 99.999% of people store their passwords.
If you want to argue that you wish to provide the password back to a user if they lose/forget it, then please don't. Issue them with a temporary password (which you store hashed in the db) and get them to change it on first login.

Use Data Protection API either with the user or machine store (e.g. different key per account your program/database server runs under vs. one key per machine). This will help you decode the passwords later and you don't have to remember or store any encryption keys. The downside of it is that when you reinstall the system/delete the account you won't be able to recover the data, I believe.

If you use encryption for securely storing passwords, you'll need to store the encryption "key" somewhere, too. This will be the "weak link", since if someone gets hold of the encryption key, they will be able to decrypt the encrypted passwords.
Since this is passwords that we're talking about here, a much better solution is to use a one-way hash. You hash the password when the user first creates it (preferably hashing with a salt value) and store the resulting hash value. Since hashes are one-way, no one can reverse the hash to the original plain text value.
To check that a users password is correct, you simply ask the user for the plain-text password, hash their input again and compare the resulting hash value with the hash value you have stored (taking salts into account of course). If the two hash values are the same, the user has entered the correct password.
Please see the following links for further info:
Hashing Password with Salt
For encryption (if you need to use that), I'd use Rijndael (AES).

Based on your question I can see two approaches depending on why you are storing the password.
A. if you only need to authenticate using their password and nothing else.
In that case, going using an algorithm that is not reversible (Hashing) would be your best choice. You will need to make sure of a couple of things:
Make sure that the connection is encrypted when transmitting the password from the client to the server. This will prevent it from being sniffed out. This is pretty trivial to do with web applications since the web server is doing the heavy lifting for you. If not it gets a lot tricker and is the subject of an whole other question.
Choose a solid hashing algorithm to prevent collision. I would recommend SHA-256 even if it does provide a larger result than SHA1 or MD5. The reference from Microsoft on using their implementation of the algorythm is here.
Salt the password to prevent attacks using rainbowtable (i.e. looking up the password in large table with the precomputed hash and the associated password in clear text). The answer here (sited in your question) gives good pseudo code in Python on how to do it. There is also a good example of .NET code here.
B. if you need to be able to read the password for each user for other purposes than authenticating the user.
This case is easy if we are only talking about storing a password (or any kind of sensitive information) on a single computer (server). If that's the case, using the Microsoft Data Protection API would be a good solution since it is tied to that computer and (depending on the way you work) the user under which you application runs and takes care of the worst of the job for you (creating, storing, and using keys). You can find some code reference from Microsoft here. If you need it on more than one system and are not willing to enter the password on each system you install on your application then things get a lot more complex because you need to implement a lot of it from scratch. That would be the subject for another question I would think.

If you need to decrypt the password for later use and it doesn't have to be SUPER secure, then use the method here:
http://support.microsoft.com/kb/307010
It's well documented, and easy to understand.

do you need to encrypt it ever again? otherwise use a hashfunction to encrypt it and encrypt the password given by the user with the same hashfunction and look if the hashes are equal.
The reason for not using a 2-way-encryption is that one cannot decrypt your key - since a good hashfunction has collisions.

Personally, I would use something that has one-way encryption - MD5, SHA1, etc...
You can use the FormsAuthentication class with it's HashPasswordForStoringInConfigFile method. When validating the user, encrypt the entered password and compare it with the stored version.

Like ocdecio I would use TripleDes, I would also save the salt in the database too. The key for me is usually hard coded, but the salt should change for each encrypted item.

If you just need the password for an internal authentication process, you should not save the actual password, but save a hash of this password. When you need to check if a password is valid, you'll have to run the hash function on provided password and compare it with the hash you stored in your database/file. You can never find the original password from the hash.
If you need to keep the original password, you'll have to encrypt it. You can use for example a public key infrastructure if you have a process that writes the passwords (public key) and another one that reads them (private key).

Do you really need to be able to retrieve the password itself? If you're storing a password for the purposes of authenticating someone (or something), you should rather hash it (with salting) and then compare that hash to the hash of the password supplied by the party wishing to be authenticated.
If, on the other hand, you need to store the password in order to be able to retrieve it and supply it to some other authentication service later, then you might want to store it encrypted. In that case, use any decent symmetrical encryption algorithm you can, such as TripleDES or AES or Blowfish.

Briefly:
Get a big random number which you will keep private and only your application code will have access to.
Encrypt the password + random number with an ancryption algorithm like SHA1, most programming languages have a cryptography framework.
Store the hashed password.
Later when you want to check inputted passwords, you can rehash the user input and compare to the "virtually" undecipherable stored passwords.

Here's a string encryption article with example code .NET
http://www.devarticles.com/c/a/VB.Net/String-Encryption-With-Visual-Basic-.NET/3/
There is no need to use anything fancy, because anyone with a little bit of skill and determination will break it anyway.