I deployed CentOS 5.5 32-bit, added a user with useradd, then set its password with passwd. It showed up as MD5:
Code:
jsmith:$1$taiOHB01$0jEFRkUrlPx2cGo67f2tQ.:14993:0:99999:7:::
I blame chpasswd.
Debian dealt with something similar many moons ago, so clearly chpasswd figures out which algorithm to use from "somewhere else".
When we make a distribution, we don't change things like this; we modify the bare minimum to get it working on our platform. I definitely didn't get an option about it during installation, and didn't modify anything with reference to it.