I am starting to dig into the DPAPI.
Here are some good links I have found in case you need to dig into this bad boy yourself (thanks to the good folks on the CLR LISTSERV at DevelopMentor):
http://msdn.microsoft.com/library/default.asp?url=/library/en-us/dnsecure/html/windataprotection-dpapi.asp
http://www.gotdotnet.com/Community/UserSamples/Details.aspx?SampleGuid=2CB29D0D-0D24-48A2-AAD6-11900478C689
http://www.gotdotnet.com/Community/UserSamples/Details.aspx?SampleGuid=f562d15b-61c3-4dfd-9f96-375433def6fd
Plus Keith Brown discuss DPAPI in his current Windows Security book.