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The LM ones I don't fully understand, but maybe it is case insensitive and stores parts of the password so they can be cracked independently?
LM passwords use only ascii and are always converted to uppercase. After that it will fill the password with nulls if it's shorter then 14 characters. This 14 character password gets split up into 2 7 char. pieces. These pieces are used as a key in a 56bit DES encryption resulting in 2 pieces of DES cyphertext. These are concatenated and stored in the SAM.