I ran into this problem last year while working on a website that required a web service call. I posted my solution in the PHP documentation, but a lot of people are having the same issue and can't resolve it, so I've decided to go over my solution in a bit more detail and how I got to it.
While I was building my blog, I looked up password hashing (encryption) to see if there had been any changes to the 'norm' way of doing things since I last looked into the matter last year. Well, there has been.