With previous versions of Mac OS X, if you booted from an OS X install disc, you could reset any user’s password by selecting “Reset Password” from the Utilities menu.

When you boot from a Lion Recovery Disk (Recovery HD partition), you’ll find that the “Reset Password” is missing from the Utilities menu. Apple removed this option to satisfy those who considered this a security hole, however the Reset Password utility can still be accessed by selecting Terminal from the Utility menu, then entering resetpassword (followed by a return) in the Terminal window. This will launch the Reset Password utility, which works the same way is it always has. TIP: Don’t quit Terminal until you’re done with the Reset Password utility, otherwise it’ll quit them both.