I've been at places where the old passwords seemed to be kept around, so that it was detected whether or not you were switching to the password you used six or seven passwords ago.
This is done by keeping the old hashes around. The new password hash is compared to prior hashes to be sure it doesn't match any of them. This only catches exact matches on re-used passwords.
Or, the current plaintext password is compared to the new plaintext password (normally a password change requires the current password) so you can do more sophisticated similarity checks, but only compared to the current passord, not any older ones.
