I\'m working on an application in ASP.NET, and was wondering specifically how I could implement a Password Reset function if I wanted to roll my own. 
S
You could send an email to user with a link. This link would contain some hard to guess string (like GUID). On server side you would also store the same string as you sent to user. Now when user presses on link you can find in your db entry with a same secret string and reset its password.
I think Microsoft guide for ASP.NET Identity is a good start.
https://docs.microsoft.com/en-us/aspnet/identity/overview/features-api/account-confirmation-and-password-recovery-with-aspnet-identity
Code that I use for ASP.NET Identity:
Web.Config:
<add key="AllowedHosts" value="example.com,example2.com" />
AccountController.cs:
[Route("RequestResetPasswordToken/{email}/")]
[HttpGet]
[AllowAnonymous]
public async Task<IHttpActionResult> GetResetPasswordToken([FromUri]string email)
{
    if (!ModelState.IsValid)
        return BadRequest(ModelState);
    var user = await UserManager.FindByEmailAsync(email);
    if (user == null)
    {
        Logger.Warn("Password reset token requested for non existing email");
        // Don't reveal that the user does not exist
        return NoContent();
    }
    //Prevent Host Header Attack -> Password Reset Poisoning. 
    //If the IIS has a binding to accept connections on 80/443 the host parameter can be changed.
    //See https://security.stackexchange.com/a/170759/67046
    if (!ConfigurationManager.AppSettings["AllowedHosts"].Split(',').Contains(Request.RequestUri.Host)) {
            Logger.Warn($"Non allowed host detected for password reset {Request.RequestUri.Scheme}://{Request.Headers.Host}");
            return BadRequest();
    }
    Logger.Info("Creating password reset token for user id {0}", user.Id);
    var host = $"{Request.RequestUri.Scheme}://{Request.Headers.Host}";
    var token = await UserManager.GeneratePasswordResetTokenAsync(user.Id);
    var callbackUrl = $"{host}/resetPassword/{HttpContext.Current.Server.UrlEncode(user.Email)}/{HttpContext.Current.Server.UrlEncode(token)}";
    var subject = "Client - Password reset.";
    var body = "<html><body>" +
               "<h2>Password reset</h2>" +
               $"<p>Hi {user.FullName}, <a href=\"{callbackUrl}\"> please click this link to reset your password </a></p>" +
               "</body></html>";
    var message = new IdentityMessage
    {
        Body = body,
        Destination = user.Email,
        Subject = subject
    };
    await UserManager.EmailService.SendAsync(message);
    return NoContent();
}
[HttpPost]
[Route("ResetPassword/")]
[AllowAnonymous]
public async Task<IHttpActionResult> ResetPasswordAsync(ResetPasswordRequestModel model)
{
    if (!ModelState.IsValid)
        return NoContent();
    var user = await UserManager.FindByEmailAsync(model.Email);
    if (user == null)
    {
        Logger.Warn("Reset password request for non existing email");
        return NoContent();
    }            
    if (!await UserManager.UserTokenProvider.ValidateAsync("ResetPassword", model.Token, UserManager, user))
    {
        Logger.Warn("Reset password requested with wrong token");
        return NoContent();
    }
    var result = await UserManager.ResetPasswordAsync(user.Id, model.Token, model.NewPassword);
    if (result.Succeeded)
    {
        Logger.Info("Creating password reset token for user id {0}", user.Id);
        const string subject = "Client - Password reset success.";
        var body = "<html><body>" +
                   "<h1>Your password for Client was reset</h1>" +
                   $"<p>Hi {user.FullName}!</p>" +
                   "<p>Your password for Client was reset. Please inform us if you did not request this change.</p>" +
                   "</body></html>";
        var message = new IdentityMessage
        {
            Body = body,
            Destination = user.Email,
            Subject = subject
        };
        await UserManager.EmailService.SendAsync(message);
    }
    return NoContent();
}
public class ResetPasswordRequestModel
{
    [Required]
    [Display(Name = "Token")]
    public string Token { get; set; }
    [Required]
    [Display(Name = "Email")]
    public string Email { get; set; }
    [Required]
    [StringLength(100, ErrorMessage = "The {0} must be at least {2} characters long.", MinimumLength = 10)]
    [DataType(DataType.Password)]
    [Display(Name = "New password")]
    public string NewPassword { get; set; }
    [DataType(DataType.Password)]
    [Display(Name = "Confirm new password")]
    [Compare("NewPassword", ErrorMessage = "The new password and confirmation password do not match.")]
    public string ConfirmPassword { get; set; }
}
1) For generating the unique id you could use Secure Hash Algorithm. 2) timer attached? Did you mean an Expiry for the reset pwd link? Yes you can have an Expiry set 3) You can ask for some more information other than the emailId to validate.. Like date of birth or some security questions 4) You could also generate random characters and ask to enter that also along with the request.. to make sure the password request is not automated by some spyware or things like that..
First, we need to know what you already know about the user. Obviously, you have a username and an old password. What else do you know? Do you have an email address? Do you have data regarding the user's favorite flower?
Assuming you have a username, password and working email address, you need to add two fields to your user table (assuming it is a database table): a date called new_passwd_expire and a string new_passwd_id.
Assuming you have the user's email address, when someone requests a password reset, you update the user table as follows:
new_passwd_expire = now() + some number of days
new_passwd_id = some random string of characters (see below)
Next, you send an email to the user at that address:
Dear so-and-so
Someone has requested a new password for user account <username> at <your website name>. If you did request this password reset, follow this link:
http://example.com/yourscript.lang?update=<new_password_id>
If that link does not work you can go to http://example.com/yourscript.lang and enter the following into the form: <new_password_id>
If you did not request a password reset, you may ignore this email.
Thanks, yada yada
Now, coding yourscript.lang: This script needs a form. If the var update passed on the URL, the form just asks for the user's username and email address. If update is not passed, it asks for username, email address, and the id code sent in the email. You also ask for a new password (twice of course).
To verify the user's new password, you verify the username, email address, and the id code all match, that the request has not expired, and that the two new passwords match. If successful, you change the user's password to the new password and clear the password reset fields from the user table. Also be sure to log the user out/clear any login related cookies and redirect the user to the login page.
Essentially, the new_passwd_id field is a password that only works on the password reset page.
One potential improvement: you could remove <username> from the email. "Someone has request a password reset for an account at this email address...." Thus making the username something only the user knows if the email is intercepted. I didn't start off that way because if someone is attacking the account, they already know the username. This added obscurity stops man-in-the-middle attacks of opportunity in case someone malicious happens to intercept the email.
As for your questions:
generating the random string: It doesn't need to be extremely random. Any GUID generator or even md5(concat(salt,current_timestamp())) is sufficient, where salt is something on the user record like timestamp account was created. It has to be something the user can't see.
timer: Yes, you need this just to keep your database sane. No more than a week is really necessary but at least 2 days since you never know how long an email delay might last.
IP Address: Since the email could be delayed by days, IP address is only useful for logging, not for validation. If you want to log it, do so, otherwise you don't need it.
Reset Screen: See above.
Hope that covers it. Good luck.
Lots of good answers here, I wont bother repeating it all...
Except for one issue, which is repeated by almost every answer here, even though its wrong:
Guids are (realistically) unique and statistically impossible to guess.
This is not true, GUIDs are very weak identifiers, and should NOT be used to allow access to a user's account.
If you examine the structure, you get a total of 128 bits at most... which is not considered a lot nowadays.
Out of which the first half is typical invariant (for the generating system), and half of whats left is time-dependant (or something else similar).
All in all, its a very weak and easily bruteforced mechanism.   
So don't use that!
Instead, simply use a cryptographically strong random number generator (System.Security.Cryptography.RNGCryptoServiceProvider), and get at least 256 bits of raw entropy.
All the rest, as the numerous other answers provided.
A GUID sent to the email address of record is likely enough for most run-of-the-mill applications - with timeout even better.
After all, if the users emailbox has been compromised(i.e. a hacker has the logon/password for the email address), there is not much you can do about that.