Calculate SHA1 hash from binary and verify with a provided hash
I'm going to tell you the things in your code that made me wonder.

# Script that verifies the correctness of a toolbar offers

import urllib, bencode , hashlib


Extra space after bencode suggests lack of attention to detail.

from hashlib import sha1

url = "http://update.utorrent.com/installoffer.php?offer=conduit"

filename = "content.txt"

f= urllib.urlretrieve(url, filename)


Use of single-letter variables suggests lack of attention to clean code.

#Bdecoding the response

with open (str(filename), 'rb') as myfile:


filename is already a string.  Converting it to a string again suggests confusion as to what is going on.

           data=myfile.read()
           decoded = bencode.bdecode(data)


Massive indentation suggests disregard for consistent indentation style.

Downloading the file to disk then reading it into memory is poor use of available APIs. You should download the file directly into memory.

# Returning the list for the key 'offer_urls'


Excess whitespace suggests someone is enter-happy.

list = decoded['offer_urls']


"Returning" is technically incorrect here. You aren't in a function, so you aren't returning anything. Use of list is a bad name for a variable since it's a built-in Python type.

#print list


# Returning the URL of the binary that is prefixed with "http://download3.utorrent.com/"

length = len (list)


Putting spaces after function calls is odd, and you don't do it consistently. There's also rarely a good reason to store the length of a list.

prefix = "http://download3.utorrent.com/"

i= -1


No space before the =.

while i &lt; length:
     i = i + 1
     if list[i].startswith(prefix) :
        break
binary= list[i]


You are using a while loop when you should be using a for loop. It is also going to cause an IndexError, rather than fail gracefully, if the prefix isn't found.

print "The URL of the the binary is: " , binary


# Returning the sha1 hash contained in the value of the key 'offer_hash'


encrypted_hash = decoded['offer_hash']


Is that hash really encrypted?

sha1_hash1 = encrypted_hash.encode('hex')
print "The sha1 hash contained in the value of the key 'offer_hash' is: " , sha1_hash1 


# Downloading the binary and calculating its hash

urllib.urlretrieve ( binary , "utct2-en-conduit-20130523.exe")
file = "C:\Python27\utct2-en-conduit-20130523.exe"


Hard-coded filename will be easy to break. You shouldn't even need to do it. The string also contains "\" which should be escaped, or the whole string should be raw. i.e.

"C:\\Python27\\utct2-en-conduit-20130425.exe"


or

r"C:\Python27\utct2-en-conduit-20130425.exe"


or in most cases you can use the other slashes, even on Windows.

"C:/Python27/utct2-en-conduit-20130425.exe"


You got away with what you did, but that's mostly because you are lucky.

with open (file, 'rb') as myfile:
           downloaded=myfile.read()


This last piece of code did pretty much the same thing as a previous bit of code, but you didn't use a function.

k = hashlib.sha1()
k.update(downloaded)
sha1file = k.hexdigest()
print "The sha1 hash of the downloaded binary is: " , sha1file

# Verify that the calculated sha1 hash is identical to the one provided in the offer details

if (sha1file == sha1_hash1) :


You've put parentheses, which are not necessary.

    print "Test result = Pass"
else :
    print "Test result = Fail"


Your basic problems:


Your style is poor and inconsistent
A few things suggest you don't quite understand what's going on
You haven't taken care to make the code readable


Here's my take on the problem:

# Script that verifies the correctness of a toolbar offers

import urllib
import bencode
import hashlib
import contextlib

# it's common practice to put input details like this
# as global constants at the start of your script
URL = "http://update.utorrent.com/installoffer.php?offer=conduit"
PREFIX = "http://download3.utorrent.com/"

# by breaking down your task into functions
# you can make the code easier to follow
def read_bencoded_url(url):
    with contextlib.closing(urllib.urlopen(url)) as offer_file:
        return bencode.bdecode(offer_file.read())

def find_string_with_prefix(strings, prefix):
    for string in strings:
        if string.startswith(prefix):
            return string
    else:
        raise Exception("Did not find prefix: {}".format(prefix))

# this function is a bit more complicated
# but it avoids saving the file to disk or loading it entirely into memory.
# instead it hashes it 4096 bytes at a time
def hash_of_url(url):
    hasher = hashlib.sha1()
    with contextlib.closing(urllib.urlopen(url)) as binary_file:
        while True:
            data = binary_file.read(4096)
            if not data:
                break
            hasher.update(data)
    return hasher.hexdigest()

# the actual high level logic just calls the functions
# this avoid obscuring the logic with lower level details
def main():
    decoded = read_bencoded_url(URL)
    binary = find_string_with_prefix(decoded['offer_urls'], PREFIX)
    reported_hash = decoded['offer_hash'].encode('hex')
    actual_hash = hash_of_url(binary)
    print "The sha1 hash contained in the value of the key 'offer_hash' is: ", reported_hash
    print "The sha1 hash of the downloaded binary is: " , actual_hash

    if reported_hash == actual_hash:
        print "Test result = Pass"
    else:
        print "Test result = Fail"

if __name__ == '__main__':
     main()