1. Place xp_md5.dll in C:\Program Files\Microsoft SQL Server\MSSQL\Binn (or wherever appropriate).

2. Create an Extended Stored Procedure called xp_md5 in the "master" database. Right-click "Extended Stored Procedures" under the master database in the Server Manager and click "New Extended Stored Procedure...". Enter xp_md5 for the "Name" and for the "Path", enter the full path to xp_md5.dll. 