ndorfnz,
If you are encrypting the password before setting the cookie, this would be why it is saving it encrypted.
You will have to check your source code to see where you set the cookie, and what you have done with the password previous to that.
I would recommend however, using a very basic at least encryption method when you store the password, leaving it in clear text makes it all too easy to snap up and becomes a security risk.
You can search the net for any good algorithms that can be decrypted in PHP.
If you can't find where you have encrypted the password or whatnot, feel free to post code here and we can help to diagnose the issue.