Since you seem off on the issue, it's quite possible to store a password as encrypted in the database and still be able to decrypt it.
I agree that MD5 isn't what they're using, as it isn't reversible encryption, or even encryption at all, but that ignores the fact that it's very possible to store a salted, encrypted password in a database, the salt on a separate file system, and still be able to send you your password in plain text.
Eh. There are ways to keep reversible encryption pretty secure, but while I agree with the notion, it makes a huge difference if the asshole on the other end of the phone keeps yelling about PLAIN TEXT passwords.
I agree that MD5 isn't what they're using, as it isn't reversible encryption, or even encryption at all, but that ignores the fact that it's very possible to store a salted, encrypted password in a database, the salt on a separate file system, and still be able to send you your password in plain text.