How to encrypt a password for saving it later in a database or text file?

StackOverflow readers don't know how to write secure password schemes and neither do you. If you're going to do that, save time by sticking with plain text. From Enough With The Rainbow Tables: What You Need To Know About Secure Password Schemes:

Rainbow tables are easy to beat. For each password, generate a random number (a nonce). Hash the password with the nonce, and store both the hash and the nonce. The server has enough information to verify passwords (the nonce is stored in the clear). But even with a small random value, say, 16 bits, rainbow tables are infeasible: there are now 65,536 “variants” of each hash, and instead of 300 billion rainbow table entries, you need quadrillions. The nonce in this scheme is called a “salt”.

Cool, huh? Yeah, and Unix crypt —- almost the lowest common denominator in security systems —- has had this feature since 1976. If this is news to you, you shouldn’t be designing password systems. Use someone else’s good one.

Use BCrypt - Strong Password Hashing for .NET and Mono. It's a single cleanly written .cs file that will continue to meet your needs as password cracking computers get faster.

BCrypt - Strong Password Hashing for .NET and Mono