I love the Forms Authentication API for this. You do not need the Membership providers at all, just make a nice database that you approve of. I would probably encrypt the password data if I were you maybe using MD5 hashing?
All you need to do is in your database for your DataType make the password field type of NVARCHAR and a fairly large size to hash large passwords if you want.
In your code behind make a hashing function like so:
private String hashPassword(string password)
byte p = Encoding.UTF8.GetBytes(password);
MD5 hasher = new MD5CryptoServiceProvider();
Note to add the using statements at the top of your file if your using CSharp.
Then after you authenticate against the database however you want, just simply do...
FormsAuthentication.SetAuthCookie(UserNameHere, true); // true if you want a persistent cookie "remember me functionality"
That does all the work for you, and you can STILL use the if (User.Identity.IsAuthenticated) etc...