Each user profile lives under the LnBlug/userdata directory in a directory named for the user. So, for example, the profile for the username bobsmith would be in the LnBlog/userdata/bobsmith directory. Note that, because of this, your usernames will have to be valid file paths. If you stick to the common convention of user ASCII alphanumeric usernames, such as are used for e-mail, then this will not be a problem.
The profile directory will contain two critical files. The first is passwd.php, which holds the password hash for this user. This is a data file and is recreated whenever the user changes his password. It uses a .php extension so that the contents will never be sent to a browser (a minor security measure). It simply initializes two variables: $salt, which is a randomly chosen value that is appended to your password, and $pwd, which is an MD5 hash of your password with the salt concatenated to it.
The other file is user.ini, which stores field names and values for the user profile. The format of this is a standard INI file, with a single [userdata] section. This file stores all metadata on a user, including the standard fields (real name, e-mail, and homepage) and any custom fields.