Security, cryptography: Stupid Challenge - Response protocol?

Question

Ok guys just a small game:

I have some specifications for a project. At some point they ask for the following to encrypt a password over the net, saying that it is a cha

Answer 1

How about the following:

1. Server sends a random challenge
2. Client sends SHA1 checksum of (challenge+password)
3. Servers compares against SHA1 checksum of (challenge+stored password)