This security setting determines whether the operating system stores passwords using reversible encryption.

This policy provides support for applications that use protocols that require knowledge of the user's password for authentication purposes. Storing passwords using reversible encryption is essentially the same as storing plaintext versions of the passwords. For this reason, this policy should never be enabled unless application requirements outweigh the need to protect password information.

This policy is required when using Challenge-Handshake Authentication Protocol (CHAP) authentication through remote access or Internet Authentication Services (IAS). It is also required when using Digest Authentication in Internet Information Services (IIS).