I need to prohibit a user from using a few words as a password. E.g I don't want to use these words as a password. Drupal, 123456, Microsoft. When a user submits the registration form with the above terms in the password field then they get a message about the prohibited password.
This module should work. I have never used it before, but it should definitely have the feature to prohibit certain password strings. Password Policy Module
You may also want to consider the Password Strength module. Some details about it (from its project page):
... provides realistic password strength measurement and server-side enforcement for Drupal sites using pattern-matching and entropy calculation. Almost any type of password can be allowed so long as the password proves to be of high enough entropy. For inspiration see the XKCD comic on password strength.
PS: Here is how the linked comic looks like: