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How to Create a Password Reset Disk and Use It to Reset Forgotten Password in Windows 7

You can create a password reset disk in Windows 7, Windows Vista and Windows XP, so that you can regain access to the system quickly in the event of a forgotten password, without having to use third-party boot environment CDs and tools. Microsoft suggests that you create a password reset disk after creating the user account and assigning the password. Here is a walkthrough on how to create a password reset disk in Windows 7.

Creation of password reset disk requires a USB flash disk (or) a floppy disk drive to be present in the system. My suggestion is that you use a flash drive even though your system may have a floppy drive, since floppy disks are unreliable. If you have a spare flash drive or a low-capacity one (that you don’t plan to use) left in your table drawer, then it’s a good idea to use it as a password reset disk. Note that the password reset disk wizard uses less than 2 KB to store a file named userkey.psw in the drive.

Create a Password Reset Disk in Windows 7

Prerequisites: You should remember the current user account password in order to create the Password Reset Disk. And, the Password Reset Wizard needs a USB flash disk connected, or a floppy disk inserted into the drive.
Connect a USB flash drive to the PC.
Click Start, type password reset disk in the Search box, and click Create a password reset disk in the Start menu search results.
Note: If you haven’t connected a USB flash drive or inserted a floppy disk yet, the following message box appears, asking to insert a floppy disk or connect a USB flash drive.
Click Next, select the USB flash drive letter and click Next.
Type in the current user account password and click Next.
The password reset disk wizard create a file named userkey.psw (less than 2 KB)

Reset Forgotten Password Using the Password Reset Disk

If you forget the user account password in future, you can reset the password using the USB flash drive that you created earlier. Use these steps to reset the password:
In the Welcome Screen, select the user account, type an incorrect password in the Password box, and then click OK.
You’ll see the password hint message and a "Reset password…" link underneath. Click "Reset password…"
This starts the Password Reset Wizard. Insert the Password Reset Disk (thumb drive) and you’ll be asked to assign a new password for that user account.
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