Auth problem in pg_hdba.conf

Hi!

I wan't to use md5 passwords so i set in pg_hba.conf

host all 0.0.0.0 0.0.0.0 md5

Then i add some users with PGAdminII and when i check in
pg_shadow there were md5 hashes like this

md5053b5de16e........................

When i try to connect with that user it failed with error
wrong password.

I have enableb in pgadmin use encrypted pass when possible.
I also try to connect from console and i have the same error.

The i write in pg_shadow plain text passwords and now it
works.

I wan't to know why md5 does not work or what i did wrong.

Is there any option to tell pgsql to use md5

i use postgresql 7.2

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tia,
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