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That's something common. http://www.labnol.org/internet/facebook-account-passwords/21... You should research better.
The link you provided provides no explanation for why Facebook would be storing a previously used password of mine (which is quite a few characters different than my current one).
They almost certainly don't store the password, just the hash. Why do you feel that's a problem?
I don't think it's a problem, just thought it was interesting.
Google Apps does this too. It does not allow you to set your password to something that you've used before.