Unfortunately today I got my Joomla 1.5 site hacked- the index.php has been overwritten and I've found as well a php script which does something nasty with the config.php file.
I've changed the FTP password, however since the config.php file contains as well the database user/password I'd like to change it as well. What is the right place to change it ? should I change it just in config.php or somewhere else ?
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Changing the database password must be done via your hosting cPanel and then in the config.php.
Once you have done this, I would suggest upgrading to Joomla 2.5 as it is far more secure and has more features. You should also consider installing some security extensions. I answered a question regarding security which you can find in the link below:
Joomla! 2.5.4 Hacked: Having trouble with diagnosis
Here is also another bit of information I added regarding why keeping your Joomla version up to date is a good idea, if you don't already:
Why should I keep my Joomla version up to date?
Hope this helps