If you want to start over with the users then you can change the machineKey without too much trouble.
What I would do in that case is change the Keys, then register a new user, then go into the Database and copy the password and password salt from the new user record over to any other users that you want to keep.
This will allow you to log in to the other user accounts with the new password for the new one you created using the new keys.

To answer the question about what exactly the machineKey is, here is a little more detail:

The machineKey is randomly generated by dotnetnuke when you first install it.  The code looks for a node in the web.config called <InstallationDate and if it is not there then DNN will change the default keys.

The machineKey is then used to encrypt passwords that are stored in the Database.  
If you loose the keys or change the ones that were used for encryption then DNN will not be able to Decrypt the passwords when checking for valid password during authentication.

John...how does this work with upgrading?  Along with copying over the machine key from the old web.config to the new web.config, should you also copy over the <InstallationDate> node from the old web.config?  Is there any ill effect, either short or long-term from not doing so? I would assume that in an upgrade DNN would not find an <InstallationDate> node since a new web.config is generated during the upgrade. But an upgrade is an upgrade, not an install.  Does this make sense? Maybe we need a new node in the web.config <UpgradeDate>.  Someone might want to keep track via the web.config of their original install date and subsequent upgrades.

Paul

John,

I have been asked to write a application and the people I work for want the user cridentials to carry over from the DNN database.  I know where the password and password salt are located. I  even know the machine key.  I have been looking for the DNN 3 encryption and decryption function so that I can do a mass decrypt on all passwords.  Can you help me out?

Thanks,

Tim