Are Reversibly Encrypted Passwords safe, and Why isn’t it working when enabled for a user

active-directoryradiuswindows-ias-server

In my event log, when my router tries to use Radius to authetnicate I get the following:

"""The user could not be authenticated
using Challenge Handshake
Authentication Protocol (CHAP). A
reversibly encrypted password does not
exist for this user account. To ensure
that reversibly encrypted passwords
are enabled, check either the domain
password policy or the password
settings on the user account. """

However, I enabled that for the account I am using in the User's Properties in AD. Is there some other place this needs to be enabled, or maybe I have to wait for it to replicate or restart a service (Other than the Radius one)? The IAS server is the same machine as a domain controller, and I made the change on that machine, so I would think it would take effect right away.

Also, just how unsafe is it to "reversibly encrypted passwords" ?

Edit:
I should also probably say why I am doing this in case there is a better way. I am setting up a Cisco router to by an endpoint for Client-Initiated L2TP/IPSec tunnels. I want to authenticate against AD, so if there is a better way to handle the authentication please do let me know 🙂 Ideally, I could still use the built-in Windows VPN Client.

Best Answer

Microsoft's TechNet page on this (here) basically says:

"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."