Password encryption?

I have my employers FTP site on our own web server (IIS4 & MS Proxy2). Our clients need to upload data files to this site and I’m using NTFS permissions to provide security on the FTP site (I’ve disallowed anonymous access). I’m a bit concerned thatthe user names and passwords could be “sniffed” by crackers. Using MS Proxy2 what would be the most straight forward (or best) way to protect the account details on the Internet side. We intend that our customers will be using DOS command line ftp sessions to transfer the files using a normally available ISP.