md5 is invalid?

I am trying to setup postgresql 7.4.2 on Red Hat Enterprise ver 3.0.

I installed every rpm from the download directory:

$ rpm -qa | grep postgres
postgresql-docs-7.4.2-1PGDG
postgresql-contrib-7.4.2-1PGDG
postgresql-test-7.4.2-1PGDG
postgresql-libs-7.4.2-1PGDG
postgresql-debuginfo-7.4.2-1PGDG
postgresql-pl-7.4.2-1PGDG
postgresql-7.4.2-1PGDG
postgresql-devel-7.4.2-1PGDG
postgresql-python-7.4.2-1PGDG
postgresql-server-7.4.2-1PGDG
postgresql-tcl-7.4.2-1PGDG
postgresql-jdbc-7.4.2-1PGDG

I did "initdb -W -D /var/lib/pgsql/data" and it apparently worked.

I added a line to pg_hba.conf:

host all 192.168.0.0 255.255.255.0 md5

I started the server via "service postgresql start" and it appears to be
running OK.

I tried to log into the server (from userid postgres) but it failed:

$ psql template1
psql: FATAL: missing or erroneous pg_hba.conf file
HINT: See server log for details.

The log file shows:

LOG: invalid entry in pg_hba.conf file at line 67, token "md5"
FATAL: missing or erroneous pg_hba.conf file
HINT: See server log for details.