First, my question is not about password hashing, but password encryption. I'm building a desktop application that needs to authentificate the user to a third party service. To speed up the login process, I want to give the user the option to save his credentials. Since I need the password to authentificate him to the service, it can't be hashed.
I thought of using the pyCrypto module and its Blowfish or AES implementation to encrypt the credentials. The problem is where to store the key. I know some applications store the key directly in the source code, but since I am coding an open source application, this doesn't seem like a very efficient solution.
So I was wondering how, on Linux, you would implement user specific or system specific keys to increase password storing security.
If you have a better solution to this problem than using pyCrypto and system/user specific keys, don't hesitate to share it. As I said before, hashing is not a solution and I know password encryption is vulnerable, but I want to give the option to the user. Using Gnome-Keyring is not an option either, since a lot of people (including myself) don't use it.
Encrypting the passwords doesn't really buy you a whole lot more protection than storing in plaintext.  Anyone capable of accessing the database probably also has full access to your webserver machines.
However, if the loss of security is acceptable, and you really need this, I'd generate a new keyfile (from a good source of random data) as part of the installation process and use this.  Obviously store this key as securely as possible (locked down file permissions etc).  Using a single key embedded in the source is not a good idea - there's no reason why seperate installations should have the same keys.
How To Reversibly Store Password With Python On Linux?