I am currently currently using Rijndael 256-bit in CBC mode to encrypt some data which needs to be sent elsewhere. In order to enhance security, I'm taking a randomly generated SHA-256 hash and using a formula to chop off different parts it to use the encryption key and initialization vector (of course, the hash is sent with the data). The formula to generate the key and IV is fairly basic, and because the code is written in PHP, it's coded into a user-accessible page. What I'm wondering is: is this more or less safe than having one constant key and/or IV?
This is probably NOT the way you wish to go. In essence, it will take a good hacker not to long to figure out your mathematical formula for manipulating the HASH to generate your key and IV. Thus you are essentially sending the keys to the kingdom along with the kingdom itself.
Generally the way this type of operation is done, is to generate a session key (could be the same way you are doing it now), but use a public key encryption method to encrypt that session key. Then you use the public key encryption method to send the session key to the location your data is to be sent. The receiver has the public key and can encrypt the comm. channel session key.
Now both sides have the comm. channel session key and your REAL data can be encrypted using this key as the session key has not been sent in the clear.
Rijindael is an example of a symmetric crypto algorithm, where public key crypto algorithms are asymmetric. Examples of public key crypto algorithms are RSA, ECDSA (Crypto), etc....