LAN Manager

LAN Manager was a network operating system (NOS) available from multiple vendors and developed by Microsoft in cooperation with 3Com Corporation. It was designed to succeed 3Com's 3+Share network server software which ran atop a heavily modified version of MS-DOS.
History.
LAN Manager OS/2 operating system co-developed by IBM and Microsoft. It originally used the Server Message Block (SMB) protocol atop either the NetBIOS Frames (NBF) protocol or a specialized version of the Xerox Network Systems (XNS) protocol. These legacy protocols had been inherited from previous products such as MS-Net for MS-DOS, Xenix-NET for MS-Xenix, and the afore-mentioned 3+Share. A version of LAN Manager for Unix-based systems called LAN Manager/X was also available.
In 1990, Microsoft announced LAN Manager 2.0 with a host of improvements, including support for TCP/IP as a transport protocol. The last version of LAN Manager, 2.2, which included an MS-OS/2 1.31 base operating system, remained Microsoft's strategic server system until the release of Windows NT Advanced Server in 1993.
Versions.
Many vendors shipped licensed versions, including:
Password hashing algorithm.
The LM hash is computed as follows:
Security weaknesses.
LAN Manager authentication uses a particularly weak method of hashing a user's password known as the LM hash algorithm, stemming from the mid 1980s when viruses transmitted by floppy disks were the major concern. Although it is based on DES, a well-studied block cipher, the LM hash has several weaknesses in its design.
This makes such hashes crackable in a matter of seconds using rainbow tables, or in a few minutes using brute force. Starting with Windows NT, it was replaced by NTLM, which is still vulnerable to rainbow tables, and brute force attacks unless long, unpredictable passwords are used, see password cracking. NTLM is used for logon with local accounts except on domain controllers since Windows Vista and later versions no longer maintain the LM hash by default. Kerberos is used in Active Directory Environments.
The major weaknesses of LAN Manager authentication protocol are:
Workarounds.
To address the security weaknesses inherent in LM encryption and authentication schemes, Microsoft introduced the NTLMv1 protocol in 1993 with Windows NT 3.1. For hashing, NTLM uses Unicode support, replacing codice_5 by codice_6, which does not require any padding or truncating that would simplify the key. On the negative side, the same DES algorithm was used with only 56-bit encryption for the subsequent authentication steps, and there is still no salting. Furthermore, Windows machines were for many years configured by default to send and accept responses derived from both the LM hash and the NTLM hash, so the use of the NTLM hash provided no additional security while the weaker hash was still present. It also took time for artificial restrictions on password length in management tools such as User Manager to be lifted.
While LAN Manager is considered obsolete and current Windows operating systems use the stronger NTLMv2 or Kerberos authentication methods, Windows systems before Windows Vista/Windows Server 2008 enabled the LAN Manager hash by default for backward compatibility with legacy LAN Manager and Windows ME or earlier clients, or legacy NetBIOS-enabled applications. It has for many years been considered good security practice to disable the compromised LM and NTLMv1 authentication protocols where they aren't needed.
Starting with Windows Vista and Windows Server 2008, Microsoft disabled the LM hash by default; the feature can be enabled for local accounts via a security policy setting, and for Active Directory accounts by applying the same setting via domain Group Policy. The same method can be used to turn the feature off in Windows 2000, Windows XP and NT. Users can also prevent a LM hash from being generated for their own password by using a password at least fifteen characters in length.
NTLM hashes have in turn become vulnerable in recent years to various attacks that effectively make them as weak today as LanMan hashes were back in 1998.
Reasons for continued use of LM hash.
Many legacy third party SMB implementations have taken considerable time to add support for the stronger protocols that Microsoft has created to replace LM hashing because the open source communities supporting these libraries first had to reverse engineer the newer protocols—Samba took 5 years to add NTLMv2 support, while JCIFS took 10 years.
Poor patching regimes subsequent to software releases supporting the feature becoming available have contributed to some organisations continuing to use LM Hashing in their environments, even though the protocol is easily disabled in Active Directory itself.
Lastly, prior to the release of Windows Vista, many unattended build processes still used a DOS boot disk (instead of Windows PE) to start the installation of Windows using WINNT.EXE, something that requires LM hashing to be enabled for the legacy LAN Manager networking stack to work.