pgcrypto

Hi I am having trouble installing pgcrypto.
PostgreSQL version: 7.2.2

In short I don't know where to start, I have experience with MySQL and wanted
to use something similar to the password() function there to md5 crypt
password fields in my tables.

This is what I have done:
I entered "contrib/pgcrypto/"
I did "make" and "make install" in the pgcrypto directory.

I tried the above both before installing postgresql, and after installing it,
and in both cases when I tried using the crypt() function all I got was:

Function 'crypt(unknown, unknown)' does not exist

I have already read the README file in contrib/pgcrypto but all it says is:
---README.pgcrypto--START---
Edit makefile, if you want to use any external library.

Randomness blablablabla

After editing Makefile:

make
make install
---README.pgcrypto--END---

I edited the Makefile, I don't see what I can do there, except change the
random device, changing from cryptsrc=builtin to system, or something, and
moreover I not only don't see what I can do, I don't know what I SHOULD do.

this is pretty much the gist.. I was just wondering if someone could actually
be bothered to explain how to install this package, since make and make
install is obviously not plugging the library into postgresql.

In short, how do I install pgcrypto?

Thanks in advance,
Steinn E. Sigurðarson