In summary, the original LM protocol used a "hash" based on 56-bit DES. NTLMv1 supports both the older LM hash and the newer NT hash based on MD4, but still used 56-bit DES encryption to encrypt them (this is what CloudCracker was designed to crack though nothing stops it from using it to crack any DES encryption). NTLMv2 uses HMAC-MD5 instead which fixes the problem.