Passworld hash issue after upgrade

I recently upgraded to 2.6.2 from a very early version (early 2s) and I had trouble logging in. It was redirecting back to the login page. None of the solutions posted in the forums worked and after some error checking, I discovered it was messing up on the wp_validate_auth_cookie function. Commenting out 522 and 523 fixed the issue.

$key = wp_hash($username . '|' . $expiration, $scheme);
$hash = hash_hmac('md5', $username . '|' . $expiration, $key);

//if ( $hmac != $hash )
//return false;

Does anyone know why I would be getting a hash issue? Thanks.