When CHECK_POLICY is set to ON, the HASHED argument cannot be used.
When CHECK_POLICY is changed to ON, the following behavior occurs:
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CHECK_EXPIRATION is also set to ON, unless it is explicitly set to OFF.
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The password history is initialized with the value of the current password hash.
When CHECK_POLICY is changed to OFF, the following behavior occurs:
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CHECK_EXPIRATION is also set to OFF.
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The password history is cleared.
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The value of lockout_time is reset.
If MUST_CHANGE is specified, CHECK_EXPIRATION and CHECK_POLICY must be set to ON. Otherwise, the statement will fail.
If CHECK_POLICY is set to OFF, CHECK_EXPIRATION cannot be set to ON. An ALTER LOGIN statement that has this combination of options will fail.
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CHECK_EXPIRATION and CHECK_POLICY are only enforced on Windows Server 2003 and later. For more information see Password Policy.
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A known issue in Windows Server 2003 might prevent the bad password count from resetting after the Account Lockout threshold has been reached. This could cause an immediate lockout on subsequent failed login attempts. You can manually reset the bad password count by briefly setting CHECK_POLICY = OFF, followed by CHECK_POLICY = ON. For more information about the Account Lockout threshold, see Microsoft Knowledge Base article 818078: Your User Account May Be Prematurely Locked Out.
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You cannot use ALTER_LOGIN with the DISABLE argument to deny access to a Windows group. For example, ALTER_LOGIN [domain\group] DISABLE will return the following error message:
"Msg 15151, Level 16, State 1, Line 1
"Cannot alter the login 'Domain\Group', because it does not exist or you do not have permission."
This is by design.