To add MPPE support to your Kernel you need

apt-get install libpcap-dev
cd /usr/src/
tar xvzf ppp-2.4.2.tar.gz
tar xvjf linux-2.4.25.tar.bz2
tar xvzf ppp-2.4.2_cvs20040216-linux-mppe.tar.gz

If you like you can symlink /usr/src/linux to /usr/src/linux-2.4.25/ -- this is useful because some things that require kernel source to build look here for it.

ln -s /usr/src/linux-2.4.25 /usr/src/linux
cd ppp-2.4.2_cvs20040216-linux-mppe/
./ /usr/src/linux-2.4.25/
cd ../linux-2.4.25/
make menuconfig # or whatever way you prefer to set up your kernel config

PPP related options should be enabled as modules, not built into the kernel, or it will fail for some reason. Build the kernel and modules as usual, install it and reboot. Dont forget to run LILO or whatever. Fixing up a broken kernel build is beyond the scope of this document. For now I'll assume that all has been sucessfull and you are running your new kernel.

cd /usr/src/ppp-2.4.2/
make install

Your ppp should now have support for mppe encryption a quick test to see if pppd is ready.

strings /usr/sbin/pppd | grep mppe

Next load the kernel support with modprobe ppp_mppe.

To make it easier put these into /etc/modules or add these lines to /etc/modules.conf

alias ppp-compress-18 ppp_mppe
alias ppp-compress-21 bsd_comp
alias ppp-compress-24 ppp_deflate
alias ppp-compress-26 ppp_deflate

This should make them load automatically when they are needed.

Now configure your PPTP connections, or whatever you needed this support for.