If you need to store a password in memory and would like to have it encrypted you should use SecureString:
http://msdn.microsoft.com/en-us/library/system.security.securestring.aspx
For more general uses I would use a FIPS approved algorithm such as Advanced Encryption Standard, formerly known as Rijndael. See this page for an implementation example:
http://msdn.microsoft.com/en-us/library/system.security.cryptography.rijndael.aspx
