Hi Ray,
If I were faced with your requirements, I would just write a quick utility that bulk uploads the users from your legacy database into the ASP.NET membership tables. It would probably need to be a .NET utility because you'll need to encrypt/hash and salt the existing passwords which could be difficult to do in MSSQL (without perhaps an external .NET call, which kind of defeats the purpose).
I'm not sure how experienced you are with .NET, so if such a utility is beyond your current ability (though it's a great way to get started!), I'm sure there are some .NET utilities out there (google ".net user import" or "asp.net bulk user import"), or DNN modules that will do this for you (this and this look like they might work -- though I have not used either).
Hope this gets you started!
Brandon