Using the DA Insert record behaviour, click the lightening bolt to select the form field that you want to save against the field. Select your form field for password and before your press OK change the Format to Encryption - SHA1.
Your field for insertion should them show something like:
<?php echo WA_SHA1Encryption(((isset($_POST["pwd"]))?$_POST["pwd"]:"")) ?>
Where pwd is the name of your password text field on the form.