I've come across a system that is in use by a company that we are considering partnering with on a medium-sized (for us, not them) project.
They have a web service that we will need to integrate with.
My current understanding of proper username/password management is that the username may be stored as plaintext in the database. Every user should have a unique pseudo-random salt, which may also be stored in plaintext. The text of their password must be concatenated with the salt and then this combined string may be hashed and stored in the database in an nvarchar field. So long as passwords are submitted to the website (or web service) over plaintext, everything should be just lovely.
Feel free to rip into my understanding as summarized above if I'm wrong.
Anyway, back to the subject at hand. The WebService run by this potential partner doesn't accept username and password, which I had anticipated. Instead, it accepts two string fields named 'Username' and 'PasswordHash'. The 'PasswordHash' value that I have been given does indeed look like a hash, and not just a value for a mis-named password field.
This is raising a red flag for me. I'm not sure why, but I feel uncomfortable sending a hashed password over the wire for some reason. Off the top of my head I can't think of a reason why this would be a bad thing... Technically, the hash is available on the database anyway. But it's making me nervous, and I'm not sure if there's a reason for this or if I'm just being paranoid.
