I know this is old question but posting this so any newcomer can make use of it.
This is with my experience on that.
First make sure what is your encryption algorithm is.
Be sure to get root access with sudo -s
.
use authconfig --test
to check which is the encryption algorithm. If you get "password hashing algorithm is descrypt" then you have to set is first.
use authconfig --passalgo=ENCRYPTION_ALGORITHM --update
.
Where ENCRYPTION ALGORITHM may be SHA-512, SHA-256, MD-5.
After that you create a new password by passwd
command.
Enter your password and press enter. Your password will not be shown in terminal.
then re-enter the password press enter.
Then go to login page then enter your newly created password as the password.
for further reference - http://forum.centos-webpanel.com/centos-webpanel/how-to-fix-encryption-error-on-login/