Automated Password Recovery

Ok, this is a true testament to the fact that "If you work more on the design process, you spend less time in the development process."

Anyways, I am looking for an ASP based solution (ideas, I like writing the code!) for the following situation. I have read multiple articles saying that "You should never store passwords unencrypted in a database", in as much what I do is store the passwords in one way Hash MD5 encryption (can't decrypt it)

So after working for 5 hours on a getting a nice automated system that emails the user their username and password depending on the username/email address they supplied, I noticed in the email that I sent myself, that the password was a MD5 hash.

Great; all that for nothing.

When I've lost my passwords, I've seen "reactivate your account" links in emails where the user clicks on a HUGE links (the querystring is the big part) and it takes them to a page where they can do something in order to have some random password override their old password, which they can then of course log back into their control panel and change it to something more memorable (I wuv my control I made)

Anyways, you guys got an ideas how they do this, or by what method I should use to get the safest and most secure results.

I want to make sure that through both information/password changes (should I automate it and let user change PW or should they always request that change from me) and with automated pw recovery / account reactivation, that I never accidentally lock them permanently out of their accounts.