I have passwords for members on a site encrypted using MD5 and stored in the database. I want to implement a lost password functionality where the user will be emailed their
You shouldn't use MD5. Use sha1 and use also a salt, there is a lot of information on the internet.
The purpose of hashing the password is exactly that. It is used because the original password can't be gotten (theorically) so the password would be saved securily and it can be used to check if the password is correct easily.
Allmost all websites chose to generate a new password and send it by email as the forget password mechanism.