I think MD5 is a one way hashing algorithm. What that means is that once you encrypt it, the data cannot be decrypted. (I'm sure a good hacker will disagree though)
Anyways, for passwords you can save the encrypted version of the password in the database. When a user attempts to log in, encrypt the entered password using the same MD5 algorithm, and compare the encrypted version of the password against the encrypted password stored in the database.
Once you're comfortable with this approach, you can start looking at the concept of adding salt to the hashed password.
Also, there are other hashing algorithms than just MD5. If you're using .NET, there's a bunch in the framework, such as SHA512Managed. Each one has its trade offs, such as speed to hash, security, etc. Pick one that fixes your particular problem.