When comments are self-explanatory

// This function makes a new password from a plaintext password.
function encrypt_password($plain)
{
  $password = '';
  for ($i = 0; $i < 10; $i++) {
    $password .= zen_rand();
  }
  $salt = substr(md5($password), 0, 2);
  $password = md5($salt . $plain) . ':' . $salt;
  return $password;
}