That is a old config file. There were quite a few changes in version 1.6 to the password plugin, including replacing `password_hash_algorithm` with with `password_algorithm` and removing `password_crypt_hash`.
Using `password_hash_algorithm` was deprecated back in version 1.2 so I'm guessing you have upgraded a few times. To get similar results I think you want `password_algorithm = 'sha'` or `password_algorithm = 'ssha'`.
You should have a config.inc.php.dist that was shipped with the plugin for all the current options.