Try this

select 'sp_addlogin ''' + a.name + ''',@sid=',a.sid,',@passwd=',

CONVERT (VARBINARY (32), a.password),',@encryptopt=''skip_encryption''' + char(13) + 'GO'

FROM syslogins AS a

INNER JOIN maxprod.dbo.sysusers AS p

   ON a.name = p.name

where a.name = 'RUSSELLVILLE'

Which will convert the password to varbinary plus will also set the sid. This works OK for me on SQL7.