crypt vs password in pg_hba.conf

I just compiled and installed version 7.3.3 and am having a problem with
encrypted logins.

I built it using "--with-openssl" on the .configure command.

All seemed to go OK during the build and install. I created a user with a
password and am able to connect with psql using the password if pg_hba.conf has
a line like this:

host all all 192.168.0.0 255.255.255.0 password

but if I change that line to this:

host all all 192.168.0.0 255.255.255.0 crypt

the connection fails with the message:

psql: FATAL: Password authentication failed for user "robert"

I am pretty sure I don't have the password wrong since I tried redoing it
several times using "ALTER USER".

I am using SuSE Linux 8.0 which comes with postgres 7.2. If I use the stock
SuSE installation I have no problem with encrypted passwords.

ldd `which psql` shows the following:

libpq.so.3 => /usr/local/pgsql/lib/libpq.so.3 (0x40017000)
libssl.so.0.9.6 => /usr/lib/libssl.so.0.9.6 (0x40043000)
libcrypto.so.0.9.6 => /usr/lib/libcrypto.so.0.9.6 (0x40070000)
libz.so.1 => /lib/libz.so.1 (0x40141000)
libreadline.so.4 => /lib/libreadline.so.4 (0x40150000)
libcrypt.so.1 => /lib/libcrypt.so.1 (0x4017a000)
libresolv.so.2 => /lib/libresolv.so.2 (0x401ad000)
libnsl.so.1 => /lib/libnsl.so.1 (0x401be000)
libdl.so.2 => /lib/libdl.so.2 (0x401d4000)
libm.so.6 => /lib/libm.so.6 (0x401d9000)
libc.so.6 => /lib/libc.so.6 (0x401fc000)
libncurses.so.5 => /lib/libncurses.so.5 (0x40324000)
/lib/ld-linux.so.2 => /lib/ld-linux.so.2 (0x40000000)

This is my first experience with postgres. Can anyone give me a hint?

--
Robert C. Paulsen, Jr.
robert(at)paulsenonline(dot)net