I am trying to locate a type of user centralized software for linux that will allow for the following.

It has to be secure
Uses some form of encryption on the passwords, not a hash
Scalable
Able to allow one user access to one system but deny him access to another.

I have configured NIS,
It works as needed, except it is not very secure.

Any help on this matter would be much appreciated.

Are all the clients Linux? How big is your user pool, Samba4 is still in alpha stage, but I built it and it worked good for my purpose. Also, some distros like Redhat/CentOS have a directory server you can install and configure. I have done this also, but did not tinker with it much because I got bored and reformatted my server and started from scratch, and did not reinstall it yet.

It is a complete linux environment, and my user base is sitting at about 50 users and growing.

You might take a look at ebox , http://www.ebox-platform.com/

I will take a look at that, here is what i have so far tried and am trying.

NIS/YP
Kerberos
OpenLDAP
Kerberos+OpenLDAP (still working on this)

Is it possible to configure Kerberos to store the passwords for an NIS Mapped network.

I liked the way NIS worked, as I could disallow all users except for a selected few to the environments they needed access too. but because of how the NIS/YP send the password has unencrypted across the network it makes it not a viable solution.

The issue I was having with LDAP, is denying users access to a specific machine, while providing them access to others. I could only get this one to work by having all users access every machine.