Not exactly, it is obsfucated rather than encrypted and so can be determined
reasonably easily from a network trace. SQL2005 improves on this and all
login communication is encrypted.

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HTH
Jasper Smith (SQL Server MVP)
http://www.sqldbatips.com
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> If connecting to a database with Query Analyser or Enterprise Manager
> using Sql-authentication, is the login information sent over the network
> in clear text?
>
> Regards,
> TWH